Following amendments to the Fair Work Act in December 2022, employment law is in a period of substantial and significant reform. It is crucial for Australian employers to be aware of and to understand these changes.

The latest tranche of changes came into effect on 6 June 2023 as part of the staged commencement of the amendments. We summarise the key changes below.

1. Flexible working arrangements

More employees are now eligible to make a request for flexible working arrangements. The requirements for employers to consult and engage with the request, as well as the process to refuse a request, are more detailed and onerous. The Fair Work Commission (FWC) now has the power to arbitrate disputes about requests for flexible working arrangements. We addressed the new requirements for employers to respond to a request for flexible working conditions in our employment law blog, ‘Changes to flexible working arrangements – What you need to know’.

If you haven’t already done so, we recommend reviewing and updating your flexible work arrangements policies as soon as possible.

2. New penalties for pay secrecy clauses

Pay secrecy clauses, which prevent employees from disclosing their salary, bonuses or other financial incentives, were prohibited from 7 December 2022.

From 7 June 2023, employers are exposed to civil penalties of up to $66,000 per contravention of the new rules. It is crucial that employers review their employment contracts entered into and other documents from 7 December 2022 onwards to confirm no pay secrecy provisions exist.

3. Extending unpaid parental leave

There are now further requirements for employers to consult and engage with an employee’s request to extend a period of unpaid parental leave.

A request to extend unpaid parental leave may only be refused on reasonable business grounds. Before such refusal employers must consider the consequences of that refusal.

The FWC now has the power to resolve a dispute about an employer’s refusal to extend unpaid parental leave. When employers refuse a request to extend unpaid leave, they must advise employees of their right to dispute the decision at the FWC.

If you have not already done so, we recommend reviewing and updating your parental leave policies promptly.

4. Reforms to enterprise bargaining

Significant changes have been made to enterprise bargaining and workplace agreement making. Employers with current enterprise agreements in place and those with agreements expiring shortly should familiarise themselves with the new processes to negotiate an agreement.

Increased access to multi-employer bargaining

While single enterprise agreements are still the most commonly used type of enterprise agreement, there are now three new types of multi-enterprise agreements:

1. Single interest employer agreements where two or more employers with a common interest or reasonably comparable business operations wish to jointly bargain for a single agreement.

2. Supported bargaining agreements which replaces low paid bargaining. This new category aims to assist employers and employees of low paid industries such as aged care and disability care whereby the FWC is empowered to compel multiple employers to bargain together after considering a number of factors and common interest of employers.

3. Cooperative workplace agreements, which will apply to any other multi-enterprise agreement, although these agreements are not available to employees who perform general building and construction, or their employers.

Changes to test applied

To date, the better off overall test (BOOT) compared the proposed agreement with the underpinning modern award. The FWC is now also required to consider a Statement of Principles when assessing whether the agreement has been “genuinely” agreed to by employees. The FWC is empowered to amend proposed agreements that do not meet the BOOT and to reconsider if an existing enterprise agreement meets the BOOT if employees are engaging in different patterns of work or types of employment which were not considered at the time it approved the agreement.

In theory, these changes may make it easier for agreements to be approved when supported by the employer(s), bargaining representatives and unions.

Resolving deadlocks

There is now a new mechanism for resolving deadlocks during the bargaining process. The FWC has powers to make an intractable bargaining declaration for long running enterprise agreement disputes. The declaration leads to a structured process to facilitate further negotiations, arbitrate disputes and make workplace determinations.

Changes to processes

Many processes have changed in relation to enterprise agreements. It is hoped that the changes will simplify initiating the bargaining process; rectifying errors, defects or irregularities in agreements; and the process for approval.

There are also new processes in relation to protection action ballots, notice requirements for industrial action and mandatory conciliation.

For more information about these amendments and how they impact you as an employer, please contact Coleman Greig’s Employment Law team.