You asked, we’ve answered (as best we can)! In the face of skyrocketing inflation, your pay packet doesn’t just feel like it’s shrinking – it actually is. One of Labor’s major election promises was to make better pay and job security a reality for people in Australia, and they’re doing so with a HUGE industrial reforms bill called: Secure Jobs, Better Pay. Catchy!
This is a very big bill which you can read here in full. We’ve unpacked the main changes below and tried to make it as simplified as possible. These are ambitious reforms, and there is a lot of regulation and nuance that goes with it – so we highly encourage more reading than just this piece. With that said, let’s go…
UPDATED: 28th November 2022 with amendments.
What’s the goal of the bill?
Primarily, to increase wages. It aims to do so by, broadly, making it easier for employees to negotiate (or more correctly, bargain) with their employers – for better pay, conditions and security.
The Bill is actually an amendment to the existing Fair Work Act (2009). It includes a lot of stuff – it’s a really big bill, which is making some MPs unhappy – but the main laws at the heart of the proposal are:
- Introducing a new bargaining system to let workers/unions negotiate with multiple employers at once;
- Making it more difficult for employers to refuse ‘reasonable’ requests for flexible working arrangements. This applies to carers, parents with kids in school or younger, people with a disability, those aged 55 or older, and those experiencing domestic violence;
- Adding job security and equal pay to the list of things the Fair Work Commission is responsible for improving (an election promise);
- Making it unlawful for employers to put pay secrecy clauses in your contract.
After negotiations with independent Senator David Pocock, the amended version of the bill set to pass also includes setting up a new expert committee that will provide advice on economic inequality to the government in the lead up to each federal budget. The committee will focus on the structural challenges blocking people from economic inclusion, like the too-low rates for Jobseeker.
How does the proposed multi-employer bargaining system work?
In Australia, depending on your job or industry, your pay is determined by one of three methods:
- Minimum wage and award rates, set by the government;
- Individual employment contracts, where you negotiate with your employer directly;
- Enterprise bargaining agreements, where a group of workers (usually represented by their union) negotiates pay with the employer. About 15% of Australian workers are on enterprise agreements.
Enterprise bargaining agreements is what is being overhauled under the new legislation, as it currently works on a one-employer-at-a-time basis.
The new Bill attempts to fix this by introducing two new concepts. In a nutshell: unions and staff can negotiate an agreement that applies to many businesses in an industry at once, instead of one-by-one.
First, the Bill creates a ‘supported bargaining arrangement’. This applies to workers within the same industry, where there are lots of different but similar employers – for example, child care, cleaning or aged care. They will be able to work together to get a bigger pay rise, which is applied consistently across their employers.
For example, how it works now is that staff at company A can only negotiate with their direct employer; same goes for staff at companies B and C. Under the new system, all those staff would be allowed to band together to negotiate for the same deal with all three companies at once.
Second, the Bill expands the definition of ‘single-interest’ bargaining. This applies when there are many different types of workers within the same industry – the new laws allow them to collective bargaining together, if it is in the public interest to do so.
An example would be Qantas, which currently has 56 different agreements to cover all the different types of workers they employ. Under the new system, those workers would be allowed to negotiate together.
Will these changes help to increase wages?
Short answer: yes. We cannot stress this enough: in real terms, wages in Australia are the same as they were in 2012. So it’s very clear that employers have not paid workers more, even though productivity (i.e.: how much you are producing for your employer) has increased a lot. We’re generating more, but not being compensated for it.
There is evidence that workers in heavily unionised industries are receiving bigger annual pay rises than other industries – The Guardian gives construction as an example, with annual pay increases around 5% compared to the 2.7% average for jobs in the private sector.
Many other countries also have robust multi-employer bargaining arrangements. Denmark is often highlighted as a great case study for Australia to look to.
Why do people not like this Bill?
The two biggest points of contention are:
Union & Striking Power: The controversial part that has business groups and owners, some MPs, and wealthy commentators so worried is that the Bill also allows employers from different workplaces to take industrial action together. So in theory, every child care worker could simultaneously go on strike to help their negotiations.
But the existing laws that regulate industrial action still apply, which would make the above scenario pretty unlikely. The new Bill also has rules around what unions and workers must try before they strike (like mandatory arbitration).
Those same business groups are worried that employers will be forced to agree to flexible working arrangements that don’t benefit them, and will cost them money.
To address these concerns, the amended version of the bill includes: a grace period of nine months for businesses to negotiate with staff before being drawn into multi-employer bargaining; a rule that single-interest bargaining only applies to businesses that are actually similar; and a pathway for businesses with 50 employees or less to claim exemptions from flexible working arrangements.
The Definition of Small Business: The bill includes exemptions for small businesses from some of the new bargaining rules. Businesses with 20 employees or less are exempt (it was originally 15, but Labor increased the threshold on advice from a Senate inquiry). Business lobby groups, the Liberal Party, and certain crossbench MPs (we’ve outlined who below) think that is too small and wanted to raise the small business exemption to 100 employees or less.
Who is in support and who is against it?
SUPPORTS THE BILL:
- Labor, obviously.
- The Australian Workers Union, the Australian Council of Trade Unions, and lots of other unions. Read ACTU Secretary Sally McManus’ statement here.
- The Greens, who voted with the government to pass it in the House of Reps.
- House of Reps Independents: Zoe Daniel (Vic), Monique Ryan (Vic), Bob Katter (QLD) and Andrew Wilkie (SA)
- Senate Independents: Initially, David Pocock wanted the government to split the bill in two, so they can pass the easy parts now and deal with the more ambitious multi-employer bargaining reform in the New Year (read his original statement on Twitter here). However, he has negotiated with Labor to introduced some of those key amendments, and now will vote with the government to pass the Bill in the Senate.
DOES NOT SUPPORT THE BILL:
- Broadly, business lobby groups and those that support their interests are against the Bill. The reason is quite obvious: shifting power back to unions and workers (when it currently rests with businesses) will cost them money.
- The Liberal Party
- The National Party
- One Nation
- House of Reps Independents: Kate Chaney (WA), Allegra Spender (NSW), Sophie Scamps (NSW), Helen Haines (Vic), Rebekha Sharkie (SA), Zali Steggall (NSW) and Dai Le (NSW)
- Senate Independents: Keep in mind, the government needs at least one independent/minor party Senator to pass the Bill.
- Jacqui Lambie & Tammy Tyrell, from the Jaqui Lambie Network. Lambie wants businesses of any size (not just small businesses) to be able to ‘opt-out’ of multi-employer deals. Keep in mind, that would entirely defeat the purpose of the Bill.
What happens next?
Labor really wants to get this Bill passed before the end of the year – but there are only two more sitting weeks of Senate, so their deadline to convince either Pocock or Lambie is December 1st.
If that doesn’t happen, it will likely go through more extensive Senate debate and possible more significant amendments in 2023, with no guarantees it will pass even then. It’s very much wait and see.
Further Reading & Listening:
- What is ‘multi-employer bargaining’? Could it help lift wages growth in Australia? on The Guardian
- The five not-so-easy steps that would push wage growth higher on The Conversation
- Why unions and small business want industry bargaining from the jobs summit – and big business doesn’t on The Conversation
- IR a teal-breaker on The Monthly
- Wages and power prices: A wake up call for Albanese on 7am Podcast
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