Explained: How Labor’s industrial overhaul could change your work and wages

Minister Tony Burke says there is support in the community for a small change to superannuation.

Minister Tony Burke says there is support in the community for a small change to superannuation. Photo: AAP

The Albanese government has introduced its long-awaited overhaul of industrial relations laws to Parliament, promising to get wages growth moving again and close the gender pay gap.

The laundry list of reforms, many of which were negotiated at the jobs  summit earlier this year, are the biggest workplace reforms since the Fair Work Act was legislated in 2009.

It includes plans to expand multi-employer bargaining, require industrial umpires to consider pay equity when setting award conditions, and rules that will give workers more power to negotiate flexible conditions.

Workplace Relations Minister Tony Burke said the bill would enact historic changes to end a decade of stagnating wage growth for most workers.

“The introduction of this bill is about making a choice, a choice to get wages moving and end the era of deliberate wage stagnation, a choice to act to close the gender pay gap,” he told Parliament on Thursday.

“We want to see workers in good jobs, jobs with security, fair pay and proper protections.”

But how far will the changes go towards boosting wage growth as the government’s forecasts suggest real purchasing power will continue to decline over the next year?

And will reforms to close the gender pay gap go far enough to fix such a systemic problem?

Experts said that while the first major overhaul of the Fair Work Act in more than a decade would go a long way to improving workers’ pay, it was still too early to tell if the reforms would deliver on Labor’s promises.

Workplace law expert and RMIT University professor Anthony Forsyth said the reforms must be tested in practice by unions and employers, and crucially interpreted by the industrial umpire, which will take years.

“This will help wages, but it’s going to take a while,” he said.

“It will be a good few years before we see how unions are effectively able to utilise [these changes].”

Bargaining overhaul

A key element of Labor’s industrial relations reforms are changes that will make it easier for workers to negotiate across multiple employers.

This so-called multi-employer bargaining has been possible under the Fair Work Act, but as University of Sydney professor Chris Wright says, there hasn’t been a single case where it has worked.

“It’s completely unworkable,” Professor Wright said. “Some of these measures will hopefully address that.”

Labor’s bill will make a number of changes, setting up two pathways to multi-employer agreements – “supported bargaining” and “single-interest employer authorisations”.

Supported bargaining is aimed at workers in low-paid industries such as aged care, disability care and early child education – essentially, those workers who have found it most difficult to negotiate better wages and conditions.

The reforms will make it easier for unions to begin negotiations with multiple employers by changing rules that make it voluntary for employers to participate and require a majority of workers across each business to agree, Professor Forsyth said.

‘Big improvement’

“This is a really big improvement because it’s stripping back the factors or tests you need to show in order to get into this bargaining,” he said.

“Getting in the door is the hard part at the moment. There’s a much wider gateway to begin talks [under these reforms].”

In another crucial change, rules preventing unions from organising strikes over multi-employer negotiations will be repealed.

Limitations in current law, including the ability for single-employer agreements to supersede multi-employer ones, will also go.

Workplace law principal Athena Koelmeyer said it was a huge shift from current rules, which provided little recourse for unions when negotiations broke down.

“The real impediment to multi-employer bargaining producing fruit was that employees are not permitted to take industrial action,” she said.

The second pathway for multi-employer bargaining – single-interest employer authorisations – will apply more broadly than the first stream.

Crucially, there will be more hurdles in these cases for unions to start talks with multiple employers about wages and conditions.

Professor Forsyth said one such hurdle was the requirement to gain majority support from workers before such multi-employer negotiations could start.

“There are quite a few more requirements than you have to show under the supported bargaining stream,” he said.

Tackling the gender pay gap

The multi-employer bargaining reforms are expected to help close the gender pay gap – estimated at 14 per cent nationwide – by enabling industrial agreements in female-dominated industries.

Another plank of Labor’s bill will look to improve pay and conditions in such industries for workers on the award (without an agreement).

This will be done by enshrining pay equity and job security as objectives under the Fair Work Act, meaning the industrial umpire will be required to consider these matters when setting minimum award wages.

Ms Koelmeyer said this should mean the Fair Work Commission (FWC) approved higher wage increases than otherwise for industries dominated by female workers.

“The process now is having to run a whole pay equity case,” she said.

“It takes years, and it’s laborious, whereas [under these reforms] it will be something the FWC just gets used to in its award-making strategy.”

University of Sydney professor Rae Cooper said Australia had been stuck in a “scandalous” scenario with women among the most educated in the OECD, but still paid less than men across the economy.

She said the reforms were a big step towards ending the gender pay gap.

“This change is about putting gender equity at the centre of the considerations of the FWC and the operation of the industrial relations system,” Professor Cooper said.

“That’s really critical in allowing the system to be responsive to women’s work and gender equality. It’s really important to find mechanisms that aren’t in bargaining – more women sit on minimum awards than men.”

Flexible work reforms

A third key element of Labor’s industrial relations reforms are new rules that will give workers more power to negotiate flexible work conditions.

Under the changes employees will be able to request flexible work arrangements in a wider range of circumstances, including where they or an immediate family member is a domestic violence survivor.

Employers would be obligated to discuss flexible work requests and will have to give reasons for refusing an application.

If a request is refused then workers could appeal to the FWC.

Professor Cooper said that was a big change from current rules, where workers have no legislated right to request such agreements.

“There’s a really serious undersupply of high-quality flexible working [and] it plays out in a really gendered way,” she said.

“We know women are the ones who are more likely to drop out of employment or to step into more precarious flexible work to get the flexibility they need to manage their lives.”

Ms Koelmeyer said the presence of an FWC appeal mechanism would make employers take requests more seriously, even if a dispute did not end up before the commission.

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