IR Reform – 6 December 2023 Changes

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Amendment Act) will enact a number of changes to Australia’s industrial relations laws. A number of these changes become active from 6 December 2023, which include:

  • new limitations for fixed and maximum term contracts; and
  • the automatic termination of “Zombie Agreements

Fixed Term Contrcts

From 6 December 2023, there will be certain limitations under section 333E and 333H of the Fair Work Act 2009 (Cth) (FW Act) that restrict the ability of employers to:              

  • enter into fixed term contracts for a duration of a total of more than 2 years;
  • enter into more than one consecutive fixed term contract for an employee; and
  • alter the employment relationship to avoid these restrictions.

The above restrictions are subject to a number of exceptions under s333F the Secure Jobs Act, which relevantly include (but are not limited to):

  • where an employee has specialised skills that the employer does not have, and completes a distinct and identifiable task involving those skills;
  • is engaged as part of a training arrangement (for example, an apprentice or a trainee);
  • an employee engaged to work during a temporary absence of another employee;
  • an employee whose income is above the high income threshold in the year the contract is entered into;
  • a contract subject to government funding where the funding is payable for a period in excess of 2 years (with no reasonable prospects of a renewal of funding); or
  • a modern award specifically permits different fixed term contract options e.g fixed term contracts exceeding 2 years.

in the lead up to and following these changes, employers should assess their workforce structure, review the circumstances in which fixed-term contracts are used, identify relevant exceptions, establish guidelines for offering and terminating such contracts, and ensure compliance with any contract templates in the business. Contracts with the potential for multiple renewals should be revised. Employers should also evaluate contract durations and differentiate between renewals and variations of existing contracts.

For contracts deemed prohibited under the Act, they will be converted into permanent employment contracts, obliging employers to consider notice of termination, redundancy pay and the possibility of unfair dismissal claims. Breaches involve a civil remedy provision meaning that employers may also be required to pay monetary penalties. The FWC can resolve disputes related to fixed-term contracts and, where agreed to by the parties, may also arbitrate. Employees may instead seek court orders through the existing small claims procedure to address their employment status.

Sunsetting of Pre-Reform Agreements

A ‘Zombie Agreement’ is a workplace agreement that was registered prior to 1 January 2010 and continued to operate when the FW Act commenced on 1 January 2010 (pre-2010 agreements).

Any workplace agreement that was made before the commencement of the FW Act on 1 July 2009 or during the ‘bridging period’ of 1 July 2009 to 31 December 2009 (commonly called ‘Zombie Agreements’) will automatically expire 12 months after the Amendment Act commences (that is, on 7 December 2023).

Employers were required to ensure that all employees that are covered by a ‘Zombie Agreement’ were notified of these changes via written notice, on or before 6 June 2023.

There were provisions that allowed an employer, an employee or an industrial association (entitled to represent one or more employees covered by the ‘Zombie Agreement’), to apply to the Fair Work Commission (FWC) for an extension of the default period for up to four (4) years. The rationale behind this being that if employees are better off under a ‘Zombie Agreement’, they remain covered by those more favourable terms.

 If a new enterprise agreement is approved by the FWC before the termination date this will replace the ‘Zombie Agreement’ and become operative as the workplace agreement. If no new enterprise agreement is in place prior to the termination date (assuming no extension has been granted), an employee’s minimum entitlements will revert to coverage under their relevant modern award.

Written By Michael Franzone – Associate, Workplace Relations

CCIWA, Business Law WA and REEFWA has taken all reasonable care in preparing this document. The contents of this document do not constitute legal advice and should not be relied upon as such. Specific advice for your situation should be sought from CCIWA, Business Law WA or a professional adviser before any action is taken. Neither REEFWA, CCIWA nor Business Law WA accept responsibility for any claim that arises from any person acting or refraining from acting on the information contained in this document.

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