How far will the new Labor government go in terms of interfering with management prerogative?

It seems much further than the previous Liberal government, if the new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) is anything to go by. 

Whilst it is recognised (and begrudgingly accepted) that there is very little that employers can do in terms of responding to changes to awards and legislation, individual contracts were considered the ‘last bastion’ where government interference was kept to a minimum.  The Bill proposes 3 significant intrusions into an employer’s management of individual terms and conditions.

The “Pay Secrecy” proposal will allow employees and job applicants the ability to disclose (or not disclose) their own remuneration and the quantum of hours that an employee may be working.  Employer often confidentially provide differing pay and conditions via contracts of employment for very specific operational reasons and consider this confidentiality, from an HR perspective, is important for ongoing workplace relationships.  It appears that the government has taken an opposite approach and considers that this level of transparency will be fairer and more productive for the workplace.  There will also be further clauses preventing the restriction of terms applying to enterprise agreements.

The “Specified Term Contracts” proposal will prohibit the use of fixed and maximum term contracts beyond two years or where the contract may be renewed more than once, where the work is the same or substantially the same.  We previously advised the risk of repeated fixed and maximum term contracts where there were no specific business reasons for their repetition.  It appears that the new government will provide legislative force to such arrangements.  There are likely to be some exceptions where there are distinct and identifiable specialised skills or there are clear essential work requirements during peak demand periods.  Nonetheless this will be a ‘blunt instrument’ and will effectively turn an arrangement where there is a defined ‘endpoint’ by the effluxion of time into an ongoing contract reliant on specific termination provisions.

The “Flexible Working Arrangements” proposal will require employers to genuinely try and reach agreement with the employee about how such proposed flexibility arrangements could be implemented and have specific regard of the consequences of the refusal for the employee and then provide detailed reasons for any such refusal.  The written reasons for refusal will be critical to deal with FWC’s new powers to arbitrate disputes regarding this area and make orders compelling employers to implement an employee’s request for a flexible working arrangement.  The practical effect of such proposed changes is to implement additional barriers against employers simply providing ‘vanilla refusals’ and largely creating a reverse onus on employers to demonstrate they have genuinely tried to implement or find reasonable alternatives to support an employee’s request.

What should employers do?

The full extent of these provisions are not yet known and we anticipate that employer lobby groups will seek to ‘water’ their effect down.  In the interim, we recommend that employers closely monitor their existing arrangements and begin internal discussions as to how to respond to the proposed changes if the Bill is progressed unamended.

Edge Legal

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