Focusing attention on flexible work — Secure Jobs, Better Pay Act

Marilyn Pittard MONASH UNIVERSITY

Flexible work was firmly on the reform agenda of the Labor government. In the raft of reforms brought about by the enactment of the Secure Jobs, Better Pay Act, enacted in December 2022, flexible work is undergoing significant changes. This aspect of the reforms is operative from 6 June 2023.

What reforms have been made to the Secure Jobs, Better Pay Act, and how does it provide protections to employees? What does the future request for flexible work look like? How do these changes affect my organisation?

This article comes from the experts behind the Employment Law Bulletin which examines changes both in the law and government policy, keeping readers at the forefront of new liabilities and legal procedures and helping them minimise the risk of non-compliance.

Subscribers to the Employment Law Bulletin can read the full article HERE.

What are the key changes in the Secure Jobs, Better Pay Act from 6 June?

The Minister for Employment and Workplace Relations in the Second Reading Speech for Secure Jobs, Better Pay Bill 2022 (Cth) stated on 27 October 2022 that:

Flexible working arrangements not only help parents and carers but also provide job security and an economic lifeline to employees with disability, older Australians, and workers experiencing family and domestic violence.

It is clear that the policy behind flexible work aims at helping not only those with special needs — eg parents and carers — but aims to ensure that older workers, those with a disability and employees who might be experiencing domestic and family violence are not precluded from the labour market.

The key changes relate to the following:

• the categories of employees who have the right to request flexible work,
• the process to be followed by employers once they receive an application,
• the ability to refer a dispute about flexible work to the FWC, and
• the powers and procedures of the FWC and a slight clarification about reasonable business grounds.

These will be discussed below. The FW Act as amended by the Secure Jobs, Better Pay Act will be referred to as the FW Act as amended.

Expansion in the circumstances enabling the request to be made

Employees who are pregnant may now make a request for flexible work. This is a welcome change and appropriately recognises that there will be circumstances where pregnant employees may need flexible work, often temporarily.

There is also a slight change to the wording of the domestic violence aspect — it is now expressed as enabling employees who experience or support others experiencing family and domestic violence to make the request. This echoes the wording in s 106B of the FW Act as amended by the Secure Jobs, Better Pay Act, thus the circumstances now go beyond violence to also include abuse and threatening behaviour. It is also not limited to such behaviour in the employee’s household but adds in a close relative of an employee and a current or former intimate partner of the employee that seeks to control or coerce. “Close relative” also includes relatives according to the Aboriginal and Torres Strait Islander rules. Again, this is a welcome addition and one that reflects cultural diversity.

Making the request

The process for making the request by the employee has not changed — the application must still be in writing, setting out details of the changes sought and reasons for them. There are however major changes in a new process for employers — the employer can, as an alternative to simply agreeing to the request or declining it, have a new arrangement that differs from the working arrangement sought that is agreed between employer and employees after discussion.

Major alteration in the process for refusal by the employer

Essentially the employer must engage in discussion with the employee and genuinely try to reach an agreement to accommodate the employee’s circumstances. If this has happened — discussion and genuinely trying to reach agreement — and the parties cannot agree, there are a number of conditions that must be met before the employer can refuse the request sought. The employer must have had regard to the consequences for the employee of a refusal, and the refusal must be for reasonable business grounds. These are significant changes — the obligation to discuss, and the obligation to try to reach agreement and also to consider consequences for employee. There is no provision for the employer inquiring into the merits of the employee’s request. Thus there is acknowledgment of the difficulty that some smaller employers may face meeting requests for flexible work.

Reasonable business grounds

While the reasonable business grounds set out have not changed (apart from being now contained in a new s 65A(4) and (5)), there is a new note to s 65(5) to the effect that the “specific circumstances of the employer” are relevant to reasonable business grounds. This includes “the nature and size” of the employer’s enterprise. The note gives an example — “if the employer has only a small number of employees, there may be no capacity to change the working arrangements of other employees to accommodate the request”.

Communicating the decision

As with flexible work provisions prior to 6 June, the employer must respond within 21 days to the request. There is significant change, however, in what must be included in the employer’s notification of refusal.

There is now a need to give more information to the employee — apart from communicating the details of reasons as before, the employer must set out the particular business grounds, how the grounds apply, any changes that the employer might be willing to make, and the effect of the dispute resolution process discussed below.

Can employees seek review of the employer’s decision?

A very significant change, filling a gap in the previous provisions, is to enshrine a right to refer a dispute about the working arrangements to the FWC. The Minister in his Second Reading Speech was very aware of the problem of employees having no avenue for redress. The Hon Tony Burke MP stated: “Under our current laws, an employee can ask for flexible work, but if their employer says no, they've got nowhere to go.” The Secure Jobs, Better Pay Act is rectifying this deficiency.

The dispute that can be referred to the Commission must relate to a request that has been refused by the employer, or to a request that has not been responded to within 21 days. This is an essential change to enable an external party to be involved; otherwise the right to request could well be hollow. The first step however entails discussions — first, the employer and employee must try to resolve the dispute; if the dispute remains unresolved, then one of them can refer the matter to the Commission.

What can the FWC do?

The jurisdiction conferred on the Commission is not a jurisdiction that is alien to that Commission, as it has been able to deal with some disputes about flexible work in certain circumstances. However, this is a more expansive provision, giving all employees affected by an adverse decision or non-response the ability to seek the Commission’s assistance. The Commission is obliged in the first instance to “deal with the dispute”, meaning that it must initially, as it thinks appropriate, mediate, conciliate, make a recommendation, or express an opinion. It may arbitrate the matter, as set out in s 65C. Support or representation of persons is permitted in the process of resolving the dispute or when the Commission is dealing with the dispute. Consistent with other approaches, legal representation can occur only with the permission of the Commission.

Arbitration of the dispute

The Commission may arbitrate, by ordering that the grounds are reasonable business grounds or that they are not reasonable business grounds.

Where the employer has not responded within the 21 day period as required, the Commission can make an order that the employer is taken to have refused the request, and can then order the employer to “take such further steps as the FWC considers appropriate, having regard to the matters in s 65A.”

Where the Commission is satisfied that there is “no reasonable prospect of the dispute being resolved” without an order being made, it may:

• order the employer to grant the request; or
• order the employer to make other changes to accommodate the employee’s working arrangements.

It is a civil remedy provision for a person to contravene an order of the FWC.

Fairness between the parties is expressly articulated in the section — s 65C(2) provides that in making an order, the Commission must take into account fairness between the employer and the employee.

What impact and challenges are likely from the operative date of 6 June?

The likely impact and some of the challenges are outlined below.

The new emphasis on discussion between parties

The procedural details have increased so that all parties will need to know and understand these. An important part is the discussion that must take place:

• discussion may lead to an agreement between employer and employee about a new working arrangement that differs from the one requested;
• discussion is required before the employer can refuse the request; and
• discussion must take place again before a dispute about flexible work (a refusal or non-response by the employer) can be referred to the Commission.

This emphasis on discussion enables the issues to be explored and teased out more fully, and perhaps a compromise to be reached — rather than as before, simply an application in writing and a refusal in writing. Open discussion is already part of the flexible work best practice guidelines (and obligation for award-covered employees with change in working conditions) as the Fair Work Ombudsman had appropriately suggested under the pre-6 June provisions that discussion between the parties should occur (although not mandated in the FW Act). Will there be more disputes about flexible work? Given that the employer must genuinely try to reach an agreement and must have authentic reasonable business grounds for refusals that must be well articulated in the written notification to the employee, it is likely that disputes and possibly misunderstandings will be reduced. The merits of the employee’s request cannot be taken into account by the employer.

The employer’s case-by-case decision

The employer considers each application on a case-by-case basis. It must be careful therefore not to use discriminatory grounds as factors in its refusal — e.g., age, family responsibilities — either directly or indirectly using these grounds. Consequential risks are that the general protections in the FW Act may operate to give rise to a claim by the employee, or the employer may contravene anti-discrimination law.

The FWC’s role

The Commission, as we saw, has a role in effecting “fairness of the parties” — it must take into account fairness between employer and employee in making its orders. This may be no easy matter where there are two valid, yet competing positions of the employee who made the request on the one hand, and the employer that refused it on the other hand.

How does the Commission balance the needs of the employer and the needs of the employee when they are both genuine and finely balanced? What criteria should it use? There is no guidance in the FW Act as amended, but the Commission no doubt may need to devise some criteria to assist it and perhaps engage in some creative thinking to resolve the matter — for example, it might suggest that there be a trial period to see how a changed working arrangement actually works in practice.

Post-pandemic hybrid work and the new flexible working provisions

In an era where hybrid work exists — on some days the employees work at the employer’s workplace and on other days at home — and where that is decreed outside these formal provisions in the FW Act, as it has been by many employers, there may be a clash of needs between (a) the demands of the workforce as a whole (for hybrid work) and (b) the demands of employees with special circumstances in s 65.

For some workplaces, it may be a challenge to resolve these clashing needs. For example, in a workforce where most employees are working in a hybrid way there may be no more scope for further flexibility —flexibility, in the employer’s view, may be at its peak for an employer’s business. The employer will need to show reasonable business grounds for the refusal or risk an arbitrated decision of the Commission.

In another example, if the employer believes that the organisation is at its peak capacity to provide flexibility as it has granted numerous requests already to the eligible categories in s 65(1A), then a newly pregnant worker who seeks flexibility may simply be unable to be accommodated without undue extra costs being incurred by the employer. It may be hard for an employer to juggle competing valid claims. How does the employer judge that? To an extent, these issues of competing claims may already have existed, but previously, the employer was in a stronger position as there was no direct route to review the refusal.

Overall assessment

The post-pandemic hybrid method of working may exacerbate some issues about flexible work for employers and may cause an employer to rethink its hybrid work policy. Despite these challenges, the amendments to flexible work provisions in the FW Act will redress a significant gap in the law prior to 6 June, namely that there was no right of review or redress of the employer’s decision. To move flexible work forward, there must be the possibility of external third-party involvement — otherwise, the employer is the ultimate decision-maker, for reasons good or bad — and the employee cannot seek any review or resolution. These amendments, in giving the FWC a role, will rectify this previous gap.

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