Explained: How Labor’s industrial relations reforms will profoundly affect every small business

On Thursday, Minister for Employment and Workplace Relations Tony Burke tabled the Labor government’s long-awaited industrial relations reform bill in Parliament.

Across 250 pages, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 describes the government’s reform agenda in sharp detail.

If passed, the legislation would have a profound impact on every small business in Australia.

Here’s what you need to know about the bill, from its proposed overhaul of the enterprise bargaining system to new Fair Work Commission powers to enforce hybrid work arrangements.

Multi-employer bargaining

The legislation proposes to expand the existing industrial relations laws facilitating multi-employer bargaining. The underutilisation of that system has led to workers falling out of the enterprise bargaining system, Labor says, suppressing their pay and conditions.

“Multi-employer bargaining is already contemplated by the act through three streams — single interest, multi-employer and low paid,” Burke told Parliament on Thursday.

“The problem is it isn’t working.”

Labor hopes its reforms to single-interest bargaining — that is, agreements struck between workers and two or more companies in a joint venture or common enterprise — will make it “easier to bargain” while “simplifying approval requirements”.

The changes largely impact worker voting timeframes before their agreements receive FWC approval, which the bill says are “often regarded as overly prescriptive and complex”.

“Various steps that an employer must currently take within strict timeframes would be removed (for example, the requirement to take all reasonable steps to provide employees with access to the agreement during a 7-day ‘access’ period ending immediately before the start of the voting process),” it states.

Further tweaks come in the bill’s approach to multi-enterprise bargaining, which the Labor government has repeatedly championed as a driver of employee wages and conditions.

Industry groups have savaged Labor’s approach to multi-employer bargaining, saying it could open small businesses to snap industrial action, even when their own employees aren’t specifically pushing to strike.

Sensing that trepidation, the proposed bill includes “a new notice requirement before commencing employee industrial action for two types of multi-enterprise bargaining.

“Bargaining representatives would need to provide a minimum of 120 hours’ notice.”

Business groups, including the Council of Small Business Organisations Australia, want such models to be ‘opt-in’ for businesses.

Speaking on Friday morning, Burke said businesses and employees who don’t want to take part in a multi-enterprise agreement won’t be compelled to join.

The proposed bill would also empower the FWC to remove employers and affected employees from such multi-employer agreements upon application.

Consultations with industry organisations are ongoing, he added, while indicating further tweaks to bargaining are a possibility.

The current bargaining system is broken – business and unions agree on that – so we’re fixing it to make sure you get a better deal.

Our Secure Jobs, Better Pay bill is all about getting wages moving again. pic.twitter.com/K3kFdi9fHR

— Tony Burke (@Tony_Burke) October 27, 2022

Elsewhere: today’s low-paid bargaining stream puts additional rules on employers when negotiating with a workforce “who have not had access to collective bargaining or who face substantial difficulty bargaining at the enterprise level”, according to the FWC.

The low-paid bargaining stream currently only applies to multi-employer agreements. Labor wants to expand it to single-interest agreements, and rename it the ‘supported’ bargaining stream.

In doing so, collective bargaining options will expand to “those in low-paid industries such as aged care, disability care, and early childhood education and care who may lack the necessary skills, resources and power to bargain effectively”, Labor’s bill states.

“The supported bargaining stream will also assist employees and employers who may face barriers to bargaining, such as employees with a disability and First Nations employees.”

Flexible work

A long-lasting consequence of COVID-19 lockdowns was Australia’s shift to hybrid working arrangements.

While countless employees nationwide have adapted to that work-from-home flexibility, some employers are keen for fully on-site work to return.

Labor’s bill posits that workers across the country have benefited from flexible working arrangements, which have particular benefits for working parents, those with a disability, carers, and those experiencing family violence.

Where workers and employees cannot agree on hybrid working arrangements, the bill calls for the FWC to step in.

“The Bill would positively engage the right to a fair remedy by including a new dispute resolution jurisdiction for the FWC to deal with disputes where a request for a flexible working arrangement has been refused,” it states.

And, in cases ruled in favour of the employee, the FWC could impose a “variety of orders, including that the employer grants the request for flexible work arrangements, or make other changes to accommodate the employee’s circumstances”.

Tightening rules around rolling contracts

The proposed legislation takes aim at employers that retain workers in fixed-term contracts instead of making them permanent employees.

“While fixed-term contracts continue to have a legitimate purpose, their ongoing use for some employees has become another form of insecure work,” the bill states.

Off the table: offering more than two consecutive fixed-term contracts for the same role, and contracts over two years in length.

The bill calls for civil penalties for companies that breach those rules.

Labor’s thinking is that cracking down on fixed-term contracts will effectively limit another form of insecure work, but the bill also includes a carve-out for “the legitimate use of fixed-term contracts in certain circumstances”,

Abolition of the Australian Building and Construction Commission

The proposed legislation makes good on Labor’s promise to abolish the Australian Building and Construction Commission (ABCC), and union oversight body the Registered Organisations Commission (ROC).

Despite the ABCC helping building subcontractors receive $13.5 million in unpaid invoices over three years, Prime Minister Anthony Albanese has accused the Coalition-established construction industry watchdog of “relentlessly” chasing union officials “over minor infractions, while doing little to stamp out wage theft or sham contracting in the construction industry or to address worksite safety and deaths”.

Under Labor’s proposed amendments, powers currently held by the ABCC and ROC will revert to the Fair Work Ombudsman (FWO), which will become “the sole federal workplace relations regulator”.

Equal remuneration, expert panels, and prohibiting pay secrecy

The proposed legislation takes several steps to address the gender pay gap, primarily by making gender equity a goal of the Fair Work Act.

Tuesday’s federal budget included $20 million for a Pay Equity Expert Panel and a Care and Community Sector Expert Panel within the FWC, and the legislation pushes for their establishment.

Labor also seeks to empower the FWC to issue equal remuneration orders where pay gaps are discovered by those panels.

Notably, the amendments would allow the FWC to rule on pay inequality without relying on a male “comparator” for reference, and judge pay gaps by whether there has been “historical gender-based undervaluation of the work under consideration”.

That measure appears to be inspired by the aged and community care sectors, which are predominantly staffed by women — and compensated poorly in comparison to other sectors.

Another key amendment is Labor’s proposed abolition of pay secrecy clauses, which bar employees from discussing their remuneration with colleagues.

While the measure would cover all employees, pay equity advocates say such clauses prohibit women from discussing their pay rates, effectively concealing gender pay gaps within businesses.

Pay secrecy is prevalent in Australian workplaces. In a recent LinkedIn survey of nearly 5000 Australian workers, 43% said discussions about pay are often discouraged at work. 45% said more open discussions about remuneration would improve pay equity.

That doesn’t mean workers would be forced to share those details, as Labor aims to establish a positive right to privacy. In other words: if one employee asks another what they make, that worker is under no obligation to share their pay details.

A related amendment is Labor’s push to ban job ads that flagrantly advertise wages below the relevant award rate.

Doing so “would help promote a culture of compliance with industrial relations laws,” the bill states, “by encouraging employers to consider their workplace obligations before hiring employees, which should help to reduce unintentional underpayments of employees.”

Expansion of the small claims process

Underpaid employees can only claim a maximum of $20,000 in unpaid wages and entitlements through the small claims process.

Labor wants to lift that cap to $100,000.

On top of boosting the amount exploited workers can claim, Burke told Parliament that shift would allow workers to avoid slogging through more expensive legal options.

“The current low threshold forces many workers to pursue pay claims through a full court process which can be expensive, time-consuming and complex,” he said.

The bill also calls for successful claimants to have court costs reimbursed by the other party.

Prohibiting sexual harassment in connection with work, and anti-discrimination measures

As sexual harassment remains a blight on Australian workplaces, the bill aims to tighten safeguards within the industrial relations system.

It calls for the implementation of the Respect@Work recommendation that “the Fair Work system be reviewed to ensure and clarify that sexual harassment, using the definition in the Sex Discrimination Act, is expressly prohibited”.

The bill would establish a positive right to work in environments free of sexual harassment, and grant workers “quick and inexpensive” FWC dispute resolution processes where it does occur.

The bill opens new pathways for victims seeking redress, enabling “people who experience sexual harassment in connection with work to initiate civil proceedings if the FWC is unable to resolve the dispute”.

It also lays down a warning for bosses in workplaces where sexual harassment takes place.

“Principals may also be vicariously liable for acts of their employees or agents,” the bill states.

Separately, the bill wants to expand anti-discrimination provisions within the Fair Work Act to include breastfeeding, gender identity and intersex status as protected attributes.