Australia

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KEY DEVELOPMENTS FOR 2024

Large-scale reforms to a range of employment issues

On 4 September 2023, the Federal Government introduced major legislation (the “Bill”) that amends the Fair Work Act 2009 in relation to a range of employment issues. First, the Bill amends the definition of “employment” which looks to the practical reality and true nature of the employment relationship and makes the terms of the employment contract between the worker and principal no longer determinative of whether it is characterised as employment (current authority). Second, the Bill amends the definition of casual employment similarly to that of “employment”, which will prevent employers from defining the relationship as casual through the contract only but having a different practice day to day. Third, the Bill amends the right of a casual employee to convert to a permanent employee after 6 months (currently 12 months). In relation to these definitional changes, we encourage employers to be aware of the loss of control they have in defining the employment relationship through contractual documents and ensure that the true nature of the employment relationship is not otherwise (i.e. contractor).

The Bill also proposes a new right for labour hire workers or unions to get an order from the Fair Work Commission to be paid the same rate as the direct employees if there is an enterprise agreement that provides for the direct employees’ rates of pay. If this reform is passed in its current state, employers should note that the cost of labour will increase. Moreover, the Bill provides that a contractor whose annual income is less than the threshold (to be set by regulations) will be able to challenge their contract on the basis that it is harsh or unfair. Employers should therefore review contractor engagements to determine whether any employee-like workers will be captured by extensive regulation which sets out the minimum standards for their engagement and provides protections for any unfair deactivation.

Finally, the Bill creates a new criminal offence (against employers and accessories) where an employer intentionally engages in conduct that results in a failure to pay a required amount to an employee. Possible penalties include a fine of three times the underpayment, a fine of AUD 7,825,000 or 10 years imprisonment. Employers should be aware of this criminal offence and maintain a corporate culture that requires compliance with the payment of wages.

Reforms to paid parental leave

On 1 July 2023, significant reforms to government paid parental leave (“PPL”) came into effect. PPL increased in Australia in July 2023 to 20 weeks (from 18), and will progressively increase again in July 2024, July 2025 and July 2026 to 26 weeks. Two of these weeks are reserved exclusively for each parent on a ‘use it or lose it’ basis.

In addition to this headline increase, the new legislation has removed the distinction between primary and secondary parents such that the 20 weeks are jointly available to an expecting couple and can be shared in a way determined by them. The reforms also allow parents to take PPL in multiple blocks within two years of the birth or adoption of the child – these blocks can be as small as one day at a time and can have periods of work in between them. Furthermore, there is now an AUD 350,000 family income limit for claiming PPL, under which families can be assessed if they do not meet the individual income test. Finally, the reforms have expanded the eligibility requirements to allow an eligible father or partner to receive PPL regardless of whether the birth parent meets the income test or residency requirements.

Employers must be aware that employees now have increased periods of PPL and greater flexibility around how and when this leave is taken. Employers should review their parental leave policies to minimise business disruption and ensure compliance with the reforms. In the increasingly competitive Australian job market, businesses have offered their own paid parental leave policies. These benefits can run concurrently with, or in addition to, periods of government paid and unpaid parental leave. For example, employers can, and do, top up the PPL to the employee's regular salary where it is higher than the national minimum wage. The most generous parental leave policies in Australia provide employees with 26 weeks’ PPL at their current salary. Best practice amongst Australian employers is to remove the distinction between primary and secondary carers, as to promote greater gender equality by allowing parents to choose who takes leave and when. Other progressive packages come with no waiting periods, meaning employees qualify for the benefits on their first day of employment rather than having to work at the business for a minimum period before accessing it (which is the case for unpaid government parental leave as the entitlement requires the employee to have completed 12 months of continuous service with the employer). Leading employers also pay superannuation during an employee’s unpaid parental leave periods as this is not otherwise required at law.

Reduced legal costs risks for victims of workplace discrimination and sexual harassment

The Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 (the “Bill”), introduced in November 2023, proposes amendments to the equal access costs model under federal anti-discrimination law. The Bill aims to lower the financial risk of victims of workplace discrimination and sexual harassment bringing claims against an employer. Under present legislation, unsuccessful claimants may be required to pay the defendant employer’s legal costs, which is said to be a major barrier to employees. The proposed changes additionally suggest that successful claimants will not be required to bear their own legal costs. Consequently, victims/survivors of workplace discrimination and sexual harassment are more likely to speak up and bring claims against their employers, therefore possibly leading to an increase in sexual harassment claims in the workplace. However, there is debate about the impact on employers and the increased possibility of unmeritorious and vexatious claims. The Bill is currently being considered by Parliament.

KEY DEVELOPMENTS FOR 2023

Gender equality, sexual harassment and discrimination

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (“Bill”), which has recently passed parliament, includes amendments directed at addressing gender pay inequity, sexual harassment and discrimination. Importantly, the Bill effects the establishment of an Expert Panel within the Fair Work Commission (“FWC”) to decide pay equity cases, and that the Commission must consider historic undervaluing of work due to gender-based assumptions when deciding remuneration disputes. The Bill also provides that pay secrecy provisions in employment contracts will have no effect. The Bill seeks to implement, among other things, an express prohibition against workplace sexual harassment extending to all ‘workers’ (including, for example, contractors and trainees), and make available the FWC’s current Stop Sexual Harassment Orders to prospective workers and third parties. The Bill also seeks to grant the FWC expanded dispute resolution powers for sexual harassment matters. Regarding strengthened anti-discrimination measures, the Bill updates the attributes protected under the Fair Work Act 2009 (Cth) (“FW Act”) by including protection from discrimination on the basis of breastfeeding, gender identity and intersex status.

The Bill complements the recently passed Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (Cth). This new legislation introduces an express prohibition against subjecting a person to hostile work environments on the basis of sex into the Sex Discrimination Act 1984 (Cth), alongside a positive duty on employers to eliminate unlawful sex discrimination. The overall impact of the Bill’s gender equality provisions will be to open up further dispute resolution pathways and remedies for a greater number of workers and prospective workers who are aggrieved by these issues. Individuals with sexual harassment or discrimination claims may now pursue action through the FWC, Australian Human Rights Commission, or state and territory mechanisms.

To prepare for the anticipated commencement of these provisions, Australian employers should review internal policies, procedures and training materials relating to remuneration, sexual harassment and discrimination. Contracts should no longer include any terms requiring pay secrecy. Anti-discrimination policies should be updated to prohibit negative treatment on the basis of breastfeeding, gender identity or intersex status and should apply to a broad spectrum of workers, proposed workers and other parties. In particular, from a sexual harassment standpoint, employers in Australia should take note that the new positive duty against workplace sexual harassment applies to a broad spectrum of ‘workers’, and they may be held vicariously liable for the actions of their employees and agents.

Multi-employer bargaining

One of the biggest policy shifts in the Bill is the change to the enterprise agreement bargaining framework. The framework for enterprise agreement bargaining, approval, termination of the agreement and disputes about the agreement’s terms is governed by the FW Act. As part of the policy drive to encourage bargaining, and increase wage growth, the Bill reduces barriers to multi-employer bargaining and expands the FWC’s powers to resolve bargaining disputes, up to and including by arbitration.

The Bill does not introduce new streams of multi-employer bargaining, but reduces barriers to access the existing multi-employer bargaining streams. As the Bill was passed on 2 December 2022 most changes will come into effect immediately, or at the end of a six-month transition period. Overall, the introduction of this Bill is a reminder that businesses must prepare a comprehensive strategy before bargaining.

Concerns have been raised that, under the proposed amendment, competing employers within the same industry could be compelled to engage in multi-employer bargaining if their employees vote for it. As such, many employers could essentially be forced to the negotiating table. The proposed amendments would also likely empower trade unions to rope employers into good faith multi-employer bargaining.

If your business has an enterprise agreement which has passed its nominal expiry date, you should carefully consider if it would be worth negotiating a replacement agreement before the significant changes to bargaining commence in 2023. All employers with expired enterprise agreements should be considering their industrial strategy now.

Limitations on length of fixed-term contracts

The COVID-19 pandemic highlighted the risks of insecure work in Australia. With a view to promoting secure, long-term work, the new laws introduce key changes to fixed term employment, as employment arrangements of this type have increased by 50% since 1998. The new laws limit the use of fixed term contracts for the same role beyond two years or two consecutive contracts, whichever is shorter, including renewal. Certain exceptions do apply, including fixed term contacts for a distinct and identifiable task involving specialised skills, training arrangements, undertaking essential work during peak demand periods, and employees who earn above the high income threshold when the contract is entered into (currently $162,000 per annum). A modern award may also contain a term that would allow an employer to enter into a fixed term contract with an employee where that fixed term contract would otherwise be prohibited.

If a business is found to have contravened the proposed fixed term employment contract provisions, civil penalties will apply. Of note is that, in the case of a contravention, the term of the contract that provides for its expiry on a set date will be of no effect, but otherwise the contract will be valid. As a result, the employer would be liable to provide adequate notice and any applicable redundancy pay if they wish to terminate the contract. Additionally, the employee would have access to the unfair dismissal jurisdiction. In any civil penalty proceeding, the onus is on the employer to prove that the fixed term contract fits within one of the lawful exceptions.

Employers in Australia should take immediate action to review existing contract roles within their workforce to ensure compliance with the proposed provisions. The new laws will capture current employees on fixed term contracts if an employer seeks to renew their contract after the introduction of the legislation. In the case of a dispute, employees will be able to access the jurisdictions of both small claims in eligible courts and FWC for a resolution.

Hiring policies and employment contract templates for use for incoming employees should also be reviewed to ensure that they are complaint. Further, new fixed term contractors must be provided a Fixed Term Contract Information Statement (which is to be published by the Fair Work Ombudsman) by their employer at the commencement of their contract.

KEY DEVELOPMENTS FOR 2022

Scrutiny on sexual harassment

Scrutiny on sexual harassment in Australian workplaces has continued to amplify, driven by the rise of the #metoo and #timesup movements. The Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021 was enacted in September 2021, amending laws which currently exist under the Sex Discrimination Act 1984 (Cth) ("Sex Discrimination Act"), the Fair Work Act 2009 (Cth) ("Fair Work Act") and the Australian Human Rights Commission Act 1986 (Cth) as they relate to sexual harassment. These amendments had the purpose of enhancing legal protections and minimising any confusion or uncertainty around the interaction of existing legislation. The changes came to fruition following the adoption of six key recommendations (out of the 55 recommendations) made by the Australian Human Rights Commission's 'Respect@Work Report', released in 2020 following its National Inquiry into Sexual Harassment in Australian Workplaces.

Ripple effects following the Respect@Work Report and legislative amendments champion a renewed approach for Government, employers and the community to combat the issue by better preventing and responding to sexual harassment in the workplace. Key changes of note include extending the scope and application of protections under the Sex Discrimination Act, making sex-based harassment an express form of unlawful conduct, introducing ancillary / accessorial liability provisions, establishing a provision rendering victimisation a civil action for unlawful discrimination and extending the timeframe for complaints in the Australian Human Rights Commission. To date, the Australian Government has not introduced a key recommendation of the Respect@Work report to implement a ‘positive duty’ on employers to take reasonable and proportionate steps to eliminate sexual harassment and sex discrimination in the workplace, which the Government maintains already exists in workplace health and safety laws. The new expanded jurisdiction of the Fair Work Commission, to issue orders to stop sexual harassment in the workplace, was activated on 11 November 2021 and we anticipate it being a focus for 2022 as the landscape surrounding sexual harassment in the workplace continues to evolve in Australia.

Australian Employers should therefore refresh their current sexual harassment policies and procedures to ensure compliance with the new legislative changes. Organisations should also have regard to the key themes arising from the Respect@Work Report, such as their approach to transparency, and use of confidentiality agreements, in sexual harassment matters. Businesses also need to consider enhanced forms of training, particularly with respect to bystander training, and viewing sexual harassment from a workplace health and safety lens to manage the psychological and physical risks associated with sexual harassment.

In addition, employers should consider the strong message sent by the legislative changes (and the weight of public opinion) that workplace sexual harassment and discrimination is unlawful and should not be tolerated. As a result, businesses, including their boards, need to take primary responsibility and accountability for ensuring that there are governance frameworks in place to appropriately prevent and respond to workplace sexual harassment. This is all the more important following the release of the 'Equality Across the Board' report by the Australian Human Rights Commission and Australian Council of Superannuation Investors limited in 2021 on the collection and reporting of workplace data relevant to sexual harassment by ASX200 companies, as investors may also be more likely to seek further information on companies' systems and processes to prevent and address sexual harassment in their workplaces.

Labour supply issues, mandated COVID-19 vaccinations and related data protection issues

The COVID-19 pandemic has given rise to novel legal issues for employers:

Vaccination

Australian states and territories have introduced public health orders mandating COVID-19 vaccinations for certain workers (for example, based on industry or local government area) and in some cases imposing obligations on employers to ensure their workers are vaccinated. Some employers are also mandating that their workers are vaccinated in order to enter the workplace in the absence of an applicable public health order, on the basis of their duties under work, health and safety legislation. Employers can require their employees to be vaccinated if the direction is lawful and reasonable, which requires a case-by-case assessment for each organization and will be supported where there is a public health requiring vaccination and/or where a company has implemented a policy around vaccination based on health advice and a risk assessment of the workplace.

Vaccine mandates imposed by employers that are not considered lawful and reasonable risk litigious consequences and overhaul. Where employers do not complete a risk assessment, consult with their employees regarding vaccination policies and consider whether public health orders apply to their workforce, courts may find that the vaccination mandate is neither lawful nor reasonable. In the recent case of CFMMEU & Matthew Howard v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal [2021] FWCFB 6059 ('BHP case'), BHP's COVID-19 vaccination mandate was overturned, with the Fair Work Commission finding that the direction was lawful but not reasonable because BHP had failed to comply with its consultation obligations under the Work Health and Safety Act 2011 regarding its proposed vaccination policy. Vaccination mandates, whether state-based or via employers, are expected to be further challenged in the court system and we anticipate some clarity on these legal issues to be provided by the courts over the coming months.

With new public health orders being released regularly (in some cases, on a monthly or even weekly basis), employers should ensure they keep up to date with any mandatory vaccination requirements in the states and territories in which they operate, noting that the regulatory landscape differs between jurisdictions in Australia.

While in some cases employers may be able to mandate COVID-19 vaccinations in the absence of an applicable public health order, employers should generally exercise caution due to the legal complexities involved in making vaccinations mandatory (of which privacy obligations are only one example). In line with the Commission's decision in the BHP case, employers should take seriously their legal obligation under various WHS legislation to engage in a genuine consultation process with employees prior to mandating vaccinations. The Fair Work Ombudsman has recently published guidance on determining the 'reasonableness' of an employer's vaccination mandate that is useful for businesses considering vaccine directions. We recommend employers wishing to mandate the vaccination seek legal advice and assistance to ensure they have appropriate documents in place such as a COVID-19 Policy, a risk assessment and a COVID-19 Safe Plan.

Privacy

Mandatory vaccination for employees must be balanced against an employer's obligations under the Privacy Act 1988 (Cth) ("Privacy Act"), under which an employee's vaccination status is considered 'sensitive information' which can only be collected with the consent of the individual concerned and where the information is reasonably necessary for one or more of the employer's functions or activities, unless (relevantly) the collection of the information is required or authorised by law.

Where employers seek to collect health information that can be linked to individual employees, and the collection of this information is not authorised by law, employers will need to ensure that the collection of the information is in accordance with the Privacy Act. Information which may be protected under the Privacy Act as 'sensitive information' may include for example, vaccination status information, information or documents related to medical contraindications, or even leave requests relating to an upcoming or recent vaccination appointment. Determining how to respond to employees who refuse to provide their vaccination status can be complex and involves careful consideration of an employer's obligations under the Privacy Act, work, health and safety legislation, and any public health order.

Employers will also need to be prepared to demonstrate that collection of the information is reasonably necessary for one or more of their functions or activities. For example, the information cannot be collected 'just in case' or where their functions or activities can be facilitated without the collection of such information.

Labour Supply

The COVID-19 pandemic has also impacted labour supply, with COVID-19 outbreaks causing workforce shortages across most industries due to isolation requirements for close contacts, international and state border closures and illness from contracting the virus. This has given rise to a 'War on Talent'. Insufficient workforce supply has also caused some employers, particularly within healthcare and food production and logistics, to lobby the Government for shorter isolation periods for close contacts and those who contract COVID-19 to enable them to return to work more quickly.

Businesses must also be aware of the current public health orders and return-to-work guidelines when requesting employees commence or recommence work after being a close contact or contracting Covid-19. Employers should embrace hybrid working models or roster models that help ensure the entire workforce is not unwell at the same time. Employers should ensure they understand their workers' compensation requirements and requirements to report COVID-19 cases to the relevant state health authority.

Increasing casualisation of workforce

The increasing casualisation of the Australian workforce, along with legislative reforms to the Fair Work Act in 2021, have brought significant industrial reform for new and existing casual workers. The Federal Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021. The reforms are a significant development for casual employment in Australia as they introduce:

• a definition for casual employees into the Fair Work Act for the purpose of entitlements in the National Employment Standards;
• a protection for employers from double dipping claims by casual employees who claim they were misclassified and are entitled to permanent employment entitlements;
• a requirement for employers to give each casual employee a copy of the new Casual Employment Information Statement; and 
• an express obligation for employers to offer eligible casuals conversion to permanent employment, while also allowing eligible casual employees to make requests to convert to permanent employment.

The new definition of casual means that the determination of whether a person is a causal employee or not will occur at the point of offer and acceptance of employment. The statutory definition and common law approach to casual workers is now aligned following the High Court’s decision of WorkPac v Rossato & Ors [2021] HCA, which confirmed that the characterisation of an employee as a “casual” is to be determined with reference to the terms of the employment contract in place between the parties.

Our recommended steps for employers include:

1. Introduce new clauses to casual contracts that reflect the recent amendments, including:
   1. checking there is a clause that separately identifies the casual loading amount (e.g. 25%); and
   2. updating any clause that outlines what permanent entitlements are included in the casual loading amount to include the full list now outlined in the legislation.
2. Consider additional contractual clauses that enable the company to recover any casual loading paid to a casual as a debt if their employment is found to be permanent (as a safety net while this legislation is new and being tested);
3. Ensure that casual contracts do not have a clause stating that casual loading entitlements are paid in lieu of the "NES entitlements";
4. Implement processes to ensure compliance with the new casual conversion obligations (and revisit how these processes interact with award and agreement covered employees); and
5. Establish a process to ensure the Casual Employment Information Statement is provided to employees.

KEY DEVELOPMENTS FOR 2021