Lawyer cites terms and conditions of employment, enterprise bargaining, pay transparency
The new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 is causing concern amongst employers and employees, as both parties are uncertain how it will play out in 2023.
Employees are hoping for better working conditions and fairer wage bargaining agreements, while employers are fearful that the new increased regulation will lead to reduced flexibility and increased disruption.
“The Act marks the most extensive industrial relations reform seen since the introduction of the Fair Work Act some 13 years ago, and its impact will be significant,” Rohan Doyle, partner at Herbert Smith Freehills in Melbourne, said.
“It will substantively affect how Australian businesses structure and manage their workforces, including how they set their terms and conditions of employment. The changes cover a raft of areas but perhaps the most wide-ranging are those relating to enterprise bargaining.”
CEOs across Australia have expressed their reservations about the recently passed industry relations (IR) bill in Parliament, according to a new report from The Australian.
Enterprise bargaining
This has been the biggest bugbear of employers and employer groups who believe that they have now lost a lot of power.
"Instead of improving the enterprise bargaining system to help deliver outcomes suited to individual workplaces, we are now lumbered with backward-looking initiatives to expand multi-employer bargaining and reintroduce near-compulsory arbitration that is simply incapable of considering the circumstances of, and opportunities for productivity gains at individual workplaces,” Innes Willox, CEO of the national employer association Ai Group said.
"The very justification for the laws as being a means to address the decline in the wages share of income is based on a misrepresentation of the facts. ABS data show that, outside of the extraordinary circumstances of the mining sector, the wages share of national income rose over the period between June 2010 and June 2022.”
The switch in industrial policy was always to change significantly under a union-led ALP Commonwealth covernment that had been in opposition for nine years — but there was an expectation that more industry consultation would take place.
“The changes to enterprise bargaining represent a significant shift in industrial policy,” Doyle added.
“The Act expands the concept of multi-enterprise bargaining, meaning that more employees will be covered by enterprise agreements and many businesses will likely be forced to bargain together, potentially even with competitors.”
Doyle does point that some industries and businesses are not affected by the new legislation.
“Not all businesses will be impacted by these changes,” he said. “For instance, those with employees in the building and construction industry are mostly excluded from the new multi-enterprise bargaining framework; however, for most businesses, there will be fewer options to resist enterprise bargaining.
“This will present numerous challenges to human resource and industrial relations teams. Indeed, many might be forced to participate in the enterprise bargaining process for the first time, said Doyle.
“In addition, The Fair Work Commission (FWC) will have a new and much broader power to arbitrate enterprise agreements where bargaining has been protracted and there is no reasonable prospect of reaching agreement. This will significantly shift bargaining power away from employers, and more employers can expect to see bargaining end in the FWC as a result.”
National employer organisation Ai Group previously said multi-employer bargaining could hurt the economy and workplaces, citing an interim report from the Productivity Commission.
Industrial action
This is one area where employers are concerned given that they will be tied in together.
"The winners from this new legislation are the unions,” Willox added. “The losers unfortunately will be the community because of higher costs, inflation, more disruptive industrial action, lower growth of employment opportunities and higher unemployment.”
There is uncertainty as to what the impact will be with regards to unions either directly confronting employers over wage rises and worker conditions or if they will just start striking.
“What’s more, industrial action will likely be much more damaging, and the impacts will be more difficult to mitigate,” Doyle said. “This is because of the potential for industrial action to be coordinated across multiple different employers at the same time, potentially throughout entire supply chains, or industry sectors.”
“These laws will do nothing to help businesses grow, to become more productive, and to pay higher wages,” said Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry.
Gender pay gap
One issue that has been largely ignored by the media in all of this is the changes to close the gender pay gap. The Fair Work Commission now has the power to address this imbalance.
“The Act expands scope for the FWC to make Equal Remuneration Orders and installs prohibitions on and invalidation of pay secrecy clauses in employment contracts with penalties for non-compliance,” said Doyle.
“The Act also expands the scope for employees to request flexible work arrangements, and unpaid parental leave extensions including a requirement for businesses to give reasons for any refusal, puts limits on reasons for refusing a request, and gives FWC arbitration powers to deal with disputes.”
Secrecy around pay has long been a source of criticism for those campaigning to end the gender pay gap. When employees don’t know what their colleagues are earning, they are not in a good position to effectively negotiate their own salaries.
Julian Arndt, associate director at Australian Business Lawyers & Advisors, says this is the principal reason why pay secrecy clauses are disliked by employees.
