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Changes to the Fair Work Act may benefit the energy and resources sector

The energy and resources sector is a significant contributor to the economy, and its impact is estimated to continue to grow over the next decade. The Australian Resources and Energy Group (AMMA) estimates that the sector will add over 24,000 new workers by 2026 to support 98 new and expansion projects worth over $83 billion. The roles available could double depending not the construction and flow-on work required.  Western Australia and Queensland are expected to benefit the most from these initiatives.

To enable investment like this to continue and encourage job growth, the Federal Government introduced amendments to the Fair Work Act 2009 (Cth) (the Fair Work Act) in December. One of the key amendments proposed in the Bill that may impact the industry relates to greenfield agreements for major projects. A major project is defined as one where the costs of the project are at least $500 million, or one of between $250 million and $500 million that is declared a major project by the Minister.

Under the Bill, the Fair Work Commission (FWC) can approve long-term greenfields agreements for the construction of a major project that includes a nominal expiry date up to eight years after the day the agreement comes into operation. If the nominal expiry date is more than four years after the FWC approves the agreement, then the agreement must provide for annual pay increases for the nominal life of the agreement.

This change gives industry greater certainty about wage rises and removes the risk of protected industrial action when planning major projects into the future. In the past, there was a risk that employment terms may change during critical phases of long-term projects as enterprise agreements nominally expired.

The proposed amendments to the Fair Work Act also includes changes to:

●    Casual employees: This seeks to codify specific criteria so that it’s clearer whether an employee is casual. This is based on whether at the time the employer makes an offer of employment there is no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. The Bill also seeks to address double dipping where an employee has been misclassified as casual and a process to cover from casual to permanent employment.

●    Enterprise agreements: Provisions are proposed to make it easier and quicker for enterprise agreements to be agreed and approved. This includes limiting how the FWC should apply the Better Off Overall Test. Under the amendments the FWC will only be able to consider patterns of work that are reasonably foreseeable, must rely on submissions and publicly available information and must place significant weight on the views of both employers and employees that the Better Off Overall Test has been met. In addition, the FWC can approve an agreement that doesn’t meet the Best Off Overall Test if in the public interest but the circumstances do not have to be exceptional. This is a change from the existing public interest exception. These provisions would only apply for the next two years.

●    Compliance and enforcement: New criminal offences are proposed for dishonest and systematic underpayment of wages. The civil penalties and orders that can be imposed for non-compliance will also be expanded.

The Bill will be referred to the Senate Education and Employment Legislation Committee who is expected to release its report in March 2021. It is expected to be the subject of significant debate before it becomes law.

 

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