Australian legislation to support workers impacted by energy transition

The Net Zero Economy Authority Bill 2024 (Cth) (NZEA Bill), which received Royal Assent in September, was created in anticipation of the significant changes to Australia’s power generation industry as the country moves away from fossil fuel-fired infrastructure. Aiming to support workers in the coal and gas industry with training and access to new employment opportunities, the legislation – which is expected to come into effect later this year or early next year – will establish a Net Zero Economy Authority (NZEA) to oversee compliance with coal and gas plant operators’ new obligations as employers.

The Net Zero Economy Authority

The NZEA aims to “promote orderly and positive economic transformation” as Australia decarbonises. One of the most significant provisions in the new legislation is the implementation of the Energy Industry Jobs Plan (EIJP). The plan will be administered by the NZEA to support employees in emissions-intensive industries that are impacted by closures of coal and gas-fired power stations. To facilitate this support, the authority will assist affected workers with accessing new employment or other opportunities, and acquiring skills to improve their employment prospects. 

The NZEA will also:

• consult and cooperate with communities, governments and key stakeholders;
• facilitate public and private sector participation and investment in greenhouse gas emissions reduction and net zero transformation initiatives; and
• build community understanding, confidence and engagement with the net-zero transformation.

The NZEA will be made up of a board, chief executive officer and staff engaged under the Public Service Act 1999 (Cth), all of whom are required to have an appropriate balance of expertise, professional credibility and significant standing in relevant fields.

The Energy Industry Jobs Plan

The EIJP is a structural adjustment framework to help transition a workforce after the owner or operator of a coal or gas-fired power station announces its intention to close all or part of its operations.

The plan covers the transition of a dependent employer’s workforce too, such as employers who own or operate coal mines that provide coal to closing coal-fired power stations. Importantly, the NZEA Bill does not confer authority to mandate the closure of coal and gas-fired power stations. 

When the NZEA is notified that a coal or gas-fired power station intends to close (known as a ‘trigger situation’), the NZEA will undertake a ‘community of interest process’. During this process, the NZEA is required to identify ‘closing’ and ‘dependent’ employers, obtain relevant information about affected employees, and assess ‘receiving’ employers who may have job opportunities for employees transitioning out of the closing power station. 

The NZEA should then be able to make an informed decision on whether to apply to the Fair Work Commission (FWC) for a ‘community of interest determination’. The NZEA Bill will confer additional responsibilities on the FWC which will make determinations about what actions a closing or dependent employer must take to facilitate the transition of its workforce into new employment.

Deputy President Saunders, based in Newcastle, New South Wales, has been appointed as the National Practice Leader for Net Zero to lead the FWC in implementing these new processes and functions.

New categories of employment under the Net Zero Economy Authority Bill

To understand the impact of these new laws, employers must consider whether they are a ‘constitutional corporation’ (a financial or trading corporation formed in Australia or a foreign corporation doing business in Australia) that would be a ‘closing’, ‘dependent’ or ‘receiving’ employer as defined in clause 6 of the NZEA Bill. 

A ‘closing’ employer owns or operates a coal or gas-fired power station and has given a ‘trigger notice’ of its intention to close its power station, regardless of whether they have employees working at that power station. A closing employer can also be an associated entity which employs workers at the closing power station or one which operates and employs workers at a coal mine where coal is, or will be, supplied to a closing coal-fired power station - such as an in-house labour-hire company.

A ‘dependent’ employer supplies goods or services to a closing coal or gas-fired power station through a commercial arrangement and has business operations in a location that will be substantially affected by the closure of that power station. A dependent employer can also be one that has a commercial relationship with a coal mine that will be substantially impacted by the closure of the coal-fired power station subject to the trigger notice, and who has employees working on-site at that coal mine. This may include contractors employed by mechanical services businesses, or security and cleaning businesses, providing services on site at a power station that is expected to close. 

A ‘receiving’ employer can voluntarily express interest to the NZEA to offer employment to affected workers of a closing or dependent employer (‘transition employees’).  The NZEA will determine who ‘receiving’ employers are by publishing its determination on the NZEA website.  Receiving employers will most likely be businesses in the same or similar industry, and the same geographic area as closing and dependent employers, such as an employer who owns or operates a wind farm or solar energy plant. 

Practical steps for employers to ensure compliance

The NZEA Bill specifies obligations that closing and dependent employers must fulfil when they are identified in a community of interest determination by the FWC. 

General obligations which a closing or dependent employer must comply with include:

• giving employees the opportunity to express their interest in finding new employment and to access support for the transition to occur;
• informing employees about employer obligations; and
• cooperating with the NZEA in implementing the EIJP.

Other obligations that must be complied with, where reasonable, include:

• arranging and allowing advice related to current or future employment from either the employer, external advisors or unions;
• providing time off or flexible working arrangements for relevant training;
• facilitating engagement with receiving employers such as providing employees with time off to participate in recruitment processes or negotiating start dates; and
• ensuring paid time off to access this support.

In addition to general obligations, the FWC may include specific employer obligations when making a community of interest determination.

Employers who own, operate, or are associated with a coal or gas-fired power station scheduled for closure should prepare to comply with these new laws. Closing and dependent employers should begin gathering information to give to the NZEA, including names, occupations, qualifications, skill sets and contact details of participating employees, and information relating to the closing or dependent employer’s compliance with the NZEA legislation.

According to a recent statement (3-page / 244KB PDF), the FWC intends to provide targeted information materials to communities affected by applications for community of interest determinations, as well as guidance about its new functions and processes.

Co-written by Camille Wright-Gray and Suren Missaghi of Pinsent Masons.