New industrial relations reforms in the Secure Jobs, Better Pay bill will impact NFP sectors and businesses.
The government’s new Secure Jobs, Better Pay bill, tabled on 27 October 2022, addresses several key issues affecting Australia’s workforce, including pay secrecy clauses and rolling fixed-term contracts.
Some of the proposed measures would have a significant effect on those organisations accustomed to having multiple staff working for them on a continuous contract basis.
Pay secrecy clauses banned
The bill includes a ban on ‘pay secrecy clauses’ in employment contracts.
Formerly, such clauses actively prevented employees from discussing how much they were paid with colleagues. A flow-on effect of preventing employees from comparing wages and salaries has been that it helped obscured the practice of employers who paid women less for the same job.
While imposing compulsory secrecy clauses in contracts or other written agreements will be prohibited, employees would still have the discretion to choose whether they share their salary information with colleagues.
Any contracts that were agreed to before the ban will be enforceable but only up to the point at which any variation to that contract was agreed upon.
It is hoped that the easier disclosure of salary information might help to reduce the gender pay gap.
Reduction of rolling fixed-term contracts
The new rule is that fixed term contracts cannot be used for more than two years, or more than two consecutive contracts – whichever is shorter.
The proposed amendments would target rolling contracts where the job or position was substantially the same.
Formerly, many organisations would renew fixed term contracts (such as 6 months or 1 year contracts) repeatedly, rather than engaging staff on a permanent basis. The effect of this on the employee would be like being placed on perpetual probation, with hardly any job security.
The amendments would result in changes to an employer’s ability to offer fixed term employment for periods of more than two years. However, it does not apply to casuals and there will be many exceptions that organisations can claim.
The large number of exceptions includes:
- Cases where the contract pays over the high income threshold (currently $162,000), or a pro rata amount for part-time or partial year employees
- Where the work is funded by a government funding scheme of a kind prescribed by regulations and the funding is payable for more than two years, but there is no reasonable prospect that the funding will be renewed beyond that period
- Where the work relates to a governance position that is time-limited by the governing rules of a corporation
- Where the employee is covering for another employee
- Where the contract engages the employee to perform only a distinct and identifiable task involving specialised skills.
- Where a modern award permits the arrangement expressly (such as the awards covering schools and higher education).
SMEs and NFPs that regularly engage staff members on rolling fixed term contracts will be affected, so a review of staffing and hiring practices is recommended. Consult an accountant about the most viable strategy for your organisation. For example, it may be cost effective to make use of indefinite contracts with provision for termination on notice.
Other industrial relations reforms
Some of the other reforms in the industrial relations overhaul include:
- Protection from sexual harassment extended – so that all workers, regardless of occupation, will have access to the same minimum protections
- Flexible working hours negotiations encouraged – so that employees balancing responsibilities outside work can negotiate agreed working hours with employers. Employees can involve the Fair Work Commission if a reasonable request is refused.
- Multiple employer collective bargaining encouraged – so that workers in sectors like childcare, who have a common enterprise but different employers, can negotiate a common pay deal
- Employment advertisements with illegal pay rates banned – to reduce job ads that mislead prospective employees.
There will financial implications for SMEs NFPs and other businesses if any or all the reforms are passed.
Employers and managers should get a handle on the key issues now, including a review of your organisation’s:
- Employment contracts
- Confidentiality agreements
- Pay rates
- Recruitment advertising.
The Industry Relations reforms are continuing through parliament, and we will provide more information about the laws that have been passed.
Talk to our team about your review, and how to steer the most effective financial course for your organisation. Contact Next Dimension Accounting today.