What to expect from further workplace relations reforms in Australia

Draft legislation is not yet available publicly. The Albanese government is starting to drop more details about the shape and meaning of the reforms, as they continue consultation on the proposals with industry and employer groups and unions.

Given the lack of detail so far about the changes and that consultations continue, it is difficult to predict with any accuracy exactly what the new laws will look like and how employers will have to respond. What we do know now is that the changes proposed seem likely to create more uncertainty and to impose further financial and compliance costs on employers. Managers, and human resources professionals in particular, will need to be considering what risks the changes pose for their organisations, and be ready to respond quickly once the changes become law.

Employers need to look out for more information on the latest proposed changes as they come to light; start considering how the changes are likely to affect their operations; and make plan for managing any risks posed by the changes.

The takeaway message for employers is to strap in: the rough ride they’ve been experiencing over the last year or so is likely to get bumpier still.

Likely areas of reform

Casual conversion

Currently, casual employees with 12 months’ service who have been working a regular pattern of hours for the past six months have to be offered conversion to permanent employment.

Under the proposed changes, and the requirement for employers to offer conversion, casual employees would also gain the right to request conversion every six months. An additional requirement for employers to make further offers seems unlikely to be included. It is anticipated that employers will have the right to refuse the conversion request on reasonable grounds. The government has also indicated that any conversion would be prospective only, with no backpay entitlement.

If the changes go through, it could mean more paperwork and administrative costs for employers, who are already required to monitor casual patterns of hours and offer conversion. It may also create more opportunities for discord and disputes between employers and employees and their union representatives, particularly when conversion requests are rejected.

‘Same job same pay’

To address the concern that labour hire arrangements might weaken workers' entitlements, changes have been proposed for a national labour hire licensing scheme or a harmonised state system, and ‘same job same pay’ rules.

It was suggested that these changes would only apply to labour hire arrangements designed to avoid or weaken workers at sites where enterprise agreement entitlements would otherwise apply; rather than to specialist workforce suppliers or surge and temporary workforce replacement. While the government is consulting with industry groups and trade unions on how the same job same pay reform will work, it has indicated that it is considering a "multi-factor test" to separate out legitimate from illegitimate labour hire arrangements.

We anticipate that employers who have enterprise agreements and regularly use labour hire will likely be affected by these changes, though the form they will likely take is not yet clear.

Gig economy worker rights

The government also intends to give additional powers to the Fair Work Commission to regulate the terms and conditions of “employee-like” workers, including those engaged in the gig economy and other independent contractors.

While often not regarded as employees at common law, the government appears to be considering creating a third category of worker between employee and contractor, following the UK’s lead. Proposed changes seem likely to give the Commission power to hear disputes about the treatment, rights and entitlements of such workers, with a view to improving their working conditions.

Criticism of this proposal suggests that imposing traditional employment principles and modern award-like entitlements on these workers will stifle the competitive and flexible nature of the current arrangements. How the government intends to apply employee-like terms and conditions to these workers remains to be seen, and consultations continue.

Further reforms already underway

These changes will be the third round of major workplace laws made by the Albanese government since it took power in May 2022. Many of them so far have required employers and other business owners and operators to make significant changes to their operations, including employment agreements, policies, training, procedures and recruitment.

The recent changes include:

• the introduction of a positive duty on employers to eliminate sexual harassment at work, requiring employers to take a proactive rather than reactive approach to preventing sexual harassment and to apply a work health and safety approach to eliminating or minimising the risks of sexual harassment at work;
• a prohibition on pay secrecy provisions in employment agreements; and
• expansion of the scope of flexible work requests, including increased obligations on employers to provide detailed responses and alternative options.

Of these announcements, some are still to come into effect. From December 2023, these include new powers for the Australian Human Rights Commission to investigate and enforce employer compliance with the positive duty; and the prohibition on fixed term contracts for over two years including renewals, with limited exceptions.

Co-written by Emma Lutwyche of Pinsent Masons.