Labor’s New Ambitious Labour Laws

The industrial landscape of Australia has changed rapidly in recent years, with the evolution of the gig-economy and business’ over-reliance on labour hire arrangements and the increasing casualisation of the workforce. This shift has exacerbated insidious consequences such as prolific wage theft, gender inequality, and job insecurity. The new Labor Government headed by Anthony Albanese (“Labor”) is taking direct aim at some of these issues, with a series of vision statements and plans that espouse commitment to stamping out sexual harassment at work, improving job security, facilitating pathways to permanent work, and securing equal pay. In a raft of proposed bills likely to move through parliament over the coming years, Labor is proposing several legislative changes, including amendments to the Fair Work Act 2009 (Cth) (“FWA”), Australian Human Rights Commission Act 1986 (Cth) (“AHRCA”) and the Sex Discrimination Act 1984 (Cth) (“SDA”). Amongst other matters, the Labor government has promised to legislate for the 55 recommendations of the Respect@Work: Sexual Harassment National Inquiry Report (2020) (“the Report”).

These are broad and significant changes that will impact employers’ relationships with their workforces, including their obligations to employees in the workplace, as well as new reporting obligations. While some of these changes will apply differently to small business, many proposed changes will require all businesses to make some adjustments.

Sexual Harassment at Work

Following the commission of a national inquiry into sexual harassment at work in 2018, the Report was delivered in 2020, setting out 55 multi-disciplinary recommendations. The Report identified that, with respect to the existing legal framework, there was some confusion on the part of employers as to the interplay between jurisdictions of discrimination, work health and safety (“WHS”) and the fair work system, which caused them to focus their attention away from sexual harassment prevention. On the part of victims, it was similarly confusing, with no one jurisdiction providing a ‘one-stop-shop’ to bring their complaint.

Recommendations of the Report

New Positive Duty to Prevent Sexual Harassment

Labor will adopt the recommendation to implement of a new positive duty on employers to actively prevent sexual harassment. This is already the case in Victoria but proposed new federal legislation will cause this to apply nationally. This includes the duty to eliminate sex discrimination, sexual harassment, and victimisation as far as possible. The current framework can be viewed as one where employers only respond to complaints. Instead, this new approach lessens the burden on victims to make complaints and shifts responsibility to employers to prevent it from happening in the first place. Examples of active steps in preventing sexual harassment include maintaining a harassment and complaints register, having a sexual harassment policy which clearly sets out complaint making and response mechanisms, and providing ongoing training to staff, especially to managers.

Changes to the Sex Discrimination Act

The SDA will be amended to expressly prohibit the creation or facilitation of a workplace that is intimidating, hostile, humiliating or offensive on the basis of sex. This means that employers will need to take active steps to facilitate a positive workplace. Examples of changes may include auditing the workplace for offensive or pornographic materials such as magazines and posters, considering the environmental design of the workplace and ensuring individuals are aware of their duty to avoid harassing behaviour.

In addition, coverage under the SDA will expand to public servants and the definition of workplace participant will change to include a broader spectrum of people interacting with the workplace.

Expanding the Powers of the Australian Human Rights Commission

The Report also recommends that the powers of the Australian Human Rights Commission (“AHRC”) be expanded to enable it to undertake assessments as to whether an organisation has complied with the new positive duty to prevent sexual harassment. In this connection, they will also have the power to issue compliance notices, enter into agreements with employers, require enforceable undertakings and apply to the Court for orders requiring compliance.

Make Changes to the Australian Human Rights Commission Act

Labor is proposing to amend the AHRCA to provide the AHRC with the power to make enquiries into systemic unlawful discrimination, including sexual harassment. This change will see the AHRC given the power to request documents and information be produced by businesses and to examine witness. There will be penalties for non-compliance. For employers, this can be seen as a trend towards greater accountability of businesses for their role in perpetuating or preventing sexual harassment.

Labor has also committed to implementing the recommendation that a provision be inserted into the AHRCA to effectively make this a ‘no costs’ jurisdiction, in a similar way to the Fair Work jurisdiction. In most circumstances, this will reduce the likelihood of an applicant having to pay the legal costs of the alleged sexual harasser in the event that their claim is unsuccessful. This will go some way in removing barriers for victims.

Further changes to the AHRCA are imminent, with a view to making any offence under section 94 of the SDA (which relates to victimisation) a possible basis of civil action for unlawful discrimination. This means that business will need to take steps not just to prevent and eliminate sexual harassment, but to protect individuals who report or take action in relation to sexual harassment from victimisation.

The Report has highlighted how many victims were reluctant to bring a claim in the months following the incident. Many reflected on feelings of guilt and shame and stated that, if they were able to do so now, they would likely do something about it. For this reason, the Report has recommended that the AHRCA be amended to allow the AHRC to consider complaints which are made up to 24 months after the date of the incident.

Non-Disclosure Agreements

The Report identified that the use of non-disclosure agreements, or similar confidentiality provisions of settlement deeds can act to perpetuate a culture of silence with respect to victims of sexual harassment. The Report recommends therefore, that a practice note is developed, identifying best practice for use of NDAs in relation to sexual harassment matters. As these changes come to light, business will need to consider how they manage any settlement claims or confidentiality requirements pertaining to sexual harassment.

Wage Theft

Wage theft refers to underpayment or non-payment of wages and entitlements to employees. This can be a one-off occurrence or a systematic issue. Wage theft applies both in circumstances where employers intentionally and unintentionally underpay their employees. Usually, this stems from poor systems and a lack of understanding as to how employees are classified under Modern Awards. The Labor government intends to criminalise wage theft, which is a significant change from the current civil penalty provisions under the FWA. Apart from risk to reputational damage, individuals can sue businesses for unpaid wages and business may also be subject to fines. However, while we a yet to see the particulars of the legislative changes, under the new system, wage theft will be a criminal offence.

Addressing Gender Inequality and the Wage Gap

Labor intends to introduce legislation that highlights pay equity as an important objective of the FWA. It will also establish two new expert panels in the Fair Work Commission; one with respect to low-paid, traditionally female dominated industries, such as the care and community sector, while the other will deal specifically with pay equity. These expert panels will also be supported by dedicated research teams.

To ensure that businesses are taking the pay gap seriously, and to further ensure accountability, business with over 250 employees will be required to publish gender pay data to the Workplace Gender Equality Agency (“WGEA”) and will be prohibited from using pay secrecy clauses in their contracts of employment.

Paid Family and Domestic Violence Leave

Labor has already introduced the Fair work Amendment (Paid Family and Domestic Violence Leave) Bill 2022, which proposes paid family and domestic violence leave of up to 10 days. This is likely to be adopted by the parliament, so businesses should update their payroll systems and consider ways to attribute leave taken under this entitlement in a confidential manner.

Same Job Same Pay Provisions

Currently, there is a tendency for businesses to rely on labour hire companies to provide staff where the benefit is that labour used in this way is cheaper than if that same employee, doing the same work, were to be employed directly by the employer. In this way, the employer benefits from cheaper labour on a ‘commitment-free basis’, so to speak, while the employee faces lesser pay and greater job insecurity. Mr Albanese has expressed his desire to uphold the principal that ‘if you work the same job, you should get the same pay’. This will likely see Labor introduce legislation to ensure that workers hired through a labour hire company will not be paid less than if they were to be directly employed. This is currently before the parliament as the Fair Work Amendment (Equal Pay for Equal Work) Bill 2022.

Commitment to Secure Employment

Similarly, Mr Albanese’s government believes there has been an overreliance on the casual workforce, which presents issues of ongoing job insecurity. Labor has committed to improving job security for Australians. This includes providing clearer pathways from casual to permanent employment, clarity around the definition of casual employment, and leading by example, where the Government will only utilise a casual workforce where absolutely necessary.

Gig Economy

Labor aims to better regulate the gig economy by bringing it within the purview of the Fair Work Commission (“the Commission”) and empowering the Commission to make orders with respect to the minimum employment standards for these workers.

Enterprise Bargaining

Labor has renewed support for the enterprise bargaining process by seeking to introduce change that will provide the Commission with greater powers to arbitrate disputes which arise during the course of the bargaining process, reducing the instance of unilateral termination of agreements where such a termination will result in employees being worse off overall and encouraging sectoral bargaining. It is apparent that the union movement is significantly emboldened by the change of government and there is now a concerted push by the union movement to push for change in the collective bargaining system. The Australian Council of Trade Unions in particular, is looking to return to sector bargaining and multi-employer bargaining, which will effectively remove the rights of individual employers to bargain directly with their employees.

The future of employment law is changing, with new emphasis on the active prevention of sexual harassment and proposed legislative changes to improve gender equality and the pay discrepancies on the basis of gender. Labor is also committed to ensuring job security. In this regard, now is the perfect time for businesses to take a step back and consider their practices wholistically with respect to the following:

1. What does the business environment look like? Is there anything that could be construed as discriminatory, hostile, intimidating or otherwise unwelcoming that needs to be addressed? Do individuals feel comfortable and safe?
2. Is the business doing what it can to ensure that men and women are paid the same for the same work?
3. In light of the new positive duty to prevent sexual harassment, which is imminent, does the business have a clear sexual harassment policy including complaints mechanisms? Has the business provided training to employees about this and about victimisation?
4. Does the business rely on labour hire or a casual workforce? If so, it should consider the impact of casual conversion and the changes to pay outlined above?
5. Review your payroll systems to ensure that you are able to provide confidential access to paid family and domestic violence leave.
6. If your business employs more than 250 employees, you will need to review the confidentiality clauses in employment contracts to remove any prohibition on pay secrecy.

If all proposed changes are adopted as law, it will place increased emphasis on the need to ensure your business is in order, so as to avoid future investigation and compliance action, and to provide a safer and more harmonious place of work.

We regularly advise our clients as to how to meet their obligations as employers including under human rights legislation and with respect to preventing and responding to sexual harassment in the workplace.

If you require any assistance or information in relation to this client alert, please do not hesitate to contact us.

This alert is not intended to constitute and should not be treated as legal advice.