Employer obligations under the Secure Jobs, Better Pay Act, pay secrecy, fixed-term contracts and flexible work

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the SJBP Act) rewrote large parts of the Fair Work Act 2009 (Cth) (the FW Act) in a series of staged commencements that ran from December 2022 to December 2023. Every one of those changes is now in force, which means the obligations they created are live for any employer that has not yet adjusted its contracts, policies and processes.

Four of the changes affect Australian small and medium businesses directly. Pay secrecy terms are banned in employment contracts. Fixed-term contracts can no longer run beyond two years or roll over repeatedly. Employees have a broader right to request flexible working arrangements, and employers face strict deadlines for responding. And the rules for multi-enterprise bargaining were widened, so more employers can be drawn into joint negotiations with other businesses. This article sets out what each obligation requires, who it applies to, and the dates that matter.

Who the changes apply to and when

The FW Act obligations described below apply to national system employers, which in practice means most private sector employers in Australia, from a sole trader with a single employee to a large corporation. There are limited carve-outs, for example some state-based industrial relations systems in Western Australia. Most small and medium businesses will be covered, but if you are unsure whether the FW Act applies to your business, that threshold point is worth confirming with a lawyer rather than assuming.

The SJBP Act's changes commenced in stages, and the dates matter because some obligations started before others. The table below sets out the dates that matter, as set out by the Fair Work Ombudsman.

Two practical points follow from the dates. First, some obligations are already more than a year old, so the question is not whether to prepare but whether you have complied to date. Second, contracts entered into before a commencement date can still count towards limits that apply later, which is a trap the fixed-term rules in particular create.

Pay secrecy: remove the clause and never punish pay talk

The SJBP Act's first change, which took effect on 7 December 2022, gave employees new workplace rights around pay. Under section 333B of the FW Act, an employee may disclose or choose not to disclose their own remuneration, and any terms and conditions of their employment reasonably necessary to work out what they are paid, such as the number of hours they work. They may also ask other employees, whether employed by the same employer or a different one, about their pay and the terms that determine it. Those rights survive the end of employment.

The consequences for employers are direct. Under section 333C of the FW Act, any term of a contract, award or enterprise agreement that is inconsistent with those rights has no effect and cannot be enforced. And from 7 June 2023, section 333D of the FW Act makes it a contravention for an employer to enter into a contract of employment or other written agreement that includes a pay secrecy term. Section 333D is a civil remedy provision, so the Fair Work Ombudsman can take the employer to court and seek penalties. The Fair Work Ombudsman has confirmed it can start court proceedings against employers who keep pay secrecy terms in their contracts.

The practical work is an audit. Review every employment contract template, letter of offer, and any confidentiality or non-disclosure policy that prohibits employees from discussing their pay. Remove the offending clauses and make sure managers understand that disciplining or dismissing an employee for discussing pay would itself be adverse action under the general protections provisions of the FW Act, with its own penalty exposure.

The pay secrecy changes sit within the SJBP Act's stated aim of putting gender equality at the centre of the workplace relations system, and the Act also strengthened the equal remuneration provisions. For most employers the immediate question is simpler: what your staff are paid is no longer a secret they can be contractually required to keep.

Fixed-term contracts: the two-year and two-contract limits

From 6 December 2023, the FW Act limits how fixed-term contracts can be used. Under section 333E of the FW Act, an employer contravenes the Act if it enters into a contract that ends at the end of an identifiable period and any of the following applies:

• Duration: the term is longer than 2 years, including any extension or renewal periods.
• Renewals: the contract can be extended or renewed more than once, even if the total period is under 2 years.
• Consecutive contracts: the new contract follows a previous fixed-term contract for the same or substantially similar work, with substantial continuity in the employment relationship, and the combined periods exceed 2 years, an extension option in the previous contract was used, the new contract contains an extension option, or there is a chain of three contracts.

The limits do not apply to casual employees. They apply to contracts entered into on or after 6 December 2023, but earlier contracts still count when working out whether a new contract breaches the consecutive contract limits, so the audit must go back further than the commencement date.

The FW Act carves out a set of exceptions, which the Fair Work Ombudsman summarises as follows:

• Work on a specific task that requires the employee's specialised skills.
• A formal training arrangement under state or territory law, such as an apprenticeship or traineeship.
• Essential work during a peak demand period.
• Emergency circumstances, or replacing an employee who is temporarily away.
• Employees whose guaranteed earnings exceed the high income threshold for the year the contract is entered into.
• Positions funded by government funding that runs for more than 2 years and is unlikely to be renewed.
• Limited-time governance positions, such as board or council roles.
• Where a modern award or enterprise agreement expressly allows the arrangement.

There are also two duties that attach to fixed-term engagement itself. Employers must give every employee engaged on a new fixed-term contract a copy of the Fixed Term Contract Information Statement, alongside the standard Fair Work Information Statement. And under the anti-avoidance provision in section 333H of the FW Act, an employer must not terminate an employee, delay re-engaging them, change their work, or engage someone else to do the same work, in order to get around the limits.

The most expensive consequence is in section 333G of the FW Act. If an employer enters a prohibited fixed-term contract, the term that provides for termination at the end of the period has no effect. The contract becomes an ongoing one, which means the employee gains the notice of termination, redundancy pay and unfair dismissal protections they would otherwise have given up. A breach does not just attract a penalty. It converts a fixed-term arrangement into permanent employment, often years before the employer planned for it.

Flexible working arrangements: respond in writing within 21 days

From 6 June 2023, the right to request flexible working arrangements under section 65 of the FW Act was extended. In addition to the existing categories, employees who are pregnant, employees experiencing family and domestic violence, and employees who provide care or support to an immediate family or household member experiencing family and domestic violence can now make a request. The right also extends to casual employees who have been employed on a regular and systematic basis for at least 6 months and have a reasonable expectation of continuing employment.

The obligation on the employer side, under section 65A of the FW Act, is where the compliance risk sits. Before refusing a request, the employer must:

• Discuss the request with the employee and genuinely try to reach agreement about changes to accommodate their circumstances.
• Have regard to the consequences of refusing the request for the employee.
• Give a written response within 21 days of the request.

If the employer refuses, the written response must state the reasonable business grounds for the refusal and explain how those grounds apply to the specific request, set out any other changes the employer is willing to make (or state that there are none), and tell the employee how to refer a dispute to the Fair Work Commission. If employer and employee agree on changes that differ from the request, those agreed changes must also be confirmed in writing within 21 days.

The 21-day deadline is a hard one. If the employer refuses the request or simply fails to respond within 21 days, the employee can apply to the Fair Work Commission, which can now hear the dispute and make orders. That means a refusal without the required discussion and documentation can end in a Commission order imposing changes the employer resisted. The discipline that keeps employers out of trouble is administrative: log every request the day it arrives, calendar the 21-day response date, and document the discussion and the business grounds before a refusal is sent.

Bargaining: more employers can be pulled into joint negotiations

The SJBP Act widened the pathways to multi-enterprise bargaining from 6 June 2023. The Fair Work Commission can make supported bargaining authorisations and single interest employer authorisations that allow two or more employers to bargain together for a single multi-enterprise agreement. For employers, the practical effect is that a union can seek to bargain with several related or similarly situated businesses at once, and the Commission can authorise that joint process where the employers have common interests or are engaged in a joint project. An employer that would previously have bargained alone can now find itself at a table with other businesses and their workforces.

The second change gives the Commission new teeth when bargaining fails. Under section 235 of the FW Act, after the end of the minimum bargaining period, which is generally 9 months after bargaining starts or 9 months after the nominal expiry date of the existing agreement, the Commission may declare that bargaining is intractable if it has already dealt with the dispute and is satisfied there is no reasonable prospect of agreement. Once a declaration is made, and after a post-declaration negotiating period, the Commission can arbitrate and make an intractable bargaining workplace determination that sets the terms of the agreement itself.

The message for employers is that deadlock is no longer a permanent state. A union that cannot reach agreement after roughly 9 months of bargaining can push the matter to the Commission, and the Commission can impose an outcome. For small employers that have never bargained before, this raises two questions worth thinking through in advance: whether the business could be grouped into multi-enterprise bargaining, and how it would approach negotiations if it were.

Consequences of getting it wrong

The SJBP Act changes are not merely aspirational. Each of the key duties is enforceable:

• Pay secrecy: Section 333D is a civil remedy provision. The Fair Work Ombudsman can start court proceedings and seek penalties against employers that include pay secrecy terms in new contracts. Disciplining or dismissing an employee for discussing pay is adverse action with its own penalty exposure.
• Fixed-term contracts: A prohibited contract is not just unlawful. Under section 333G the end-date term has no effect, so the employee becomes ongoing and gains notice of termination, redundancy and unfair dismissal rights. Breaches can also attract penalties, and the anti-avoidance provisions catch employers that cycle staff on and off to dodge the limits.
• Flexible work: Failing to respond within 21 days, or refusing without proper discussion and documented reasonable business grounds, lets the employee take the dispute to the Fair Work Commission, which can make binding orders. The Fair Work Ombudsman can also pursue breaches of the response obligations in court.
• Bargaining: Employers that stonewall multi-enterprise bargaining can be declared intractable after the minimum bargaining period and have agreement terms imposed by Commission determination.

Beyond penalties and orders, the reputational cost matters. A Fair Work Ombudsman investigation or an adverse Commission decision is public, and in a tight labour market employees talk about how their employer treats requests for flexibility and transparency.

A compliance checklist for the four changes

If the obligations above have not been actioned yet, the following checklist covers the ground:

• Contracts: remove pay secrecy clauses from all employment contract templates, letters of offer and confidentiality policies.
• Fixed-term audit: list every fixed-term employee, their start date, their contract history, and any extension or renewal options, including contracts entered before 6 December 2023.
• Fixed-term drafting: remove multiple renewal options, cap terms at 2 years, and document any exception the business is relying on, such as the high income threshold or peak demand.
• Information statements: give every new fixed-term employee the Fixed Term Contract Information Statement alongside the Fair Work Information Statement.
• Flexible work process: nominate who receives requests, log them on arrival, calendar the 21-day response date, and keep a record of the discussion and the grounds for any refusal.
• Manager training: make sure managers know they cannot discipline or disadvantage an employee for discussing pay, and that flexible work refusals require documented business grounds.
• Bargaining awareness: assess whether the business could be drawn into multi-enterprise bargaining and review negotiation strategy before a union knocks on the door.

When a lawyer should review your position

Some of these obligations are simple enough to handle internally, but several areas reward professional review. If the business relies on a fixed-term contract exception, such as the high income threshold or government-funded positions, the drafting must satisfy the statutory tests, and getting it wrong converts the contract into ongoing employment. If flexible work requests are refused regularly, the reasonable business grounds need to be articulated in a way that will survive scrutiny by the Fair Work Commission. And if the business is facing multi-enterprise bargaining or an intractable bargaining application, the strategic decisions are significant enough to warrant advice before positions are locked in.

A practitioner can audit existing contracts and policies against the current FW Act provisions, draft compliant templates that preserve the flexibility the exceptions allow, and represent the business in Commission proceedings on flexible work or bargaining disputes.

Start with the fixed-term audit and the 21-day clock

If there is one combination of duties employers most often miss, it is the two that sit in different parts of the business: the fixed-term contract limits and the 21-day flexible work response. The fixed-term limits catch businesses that quietly renew the same employee on consecutive contracts, because the breach silently converts the employee to ongoing employment and exposes the business to redundancy and unfair dismissal claims it never planned for. The 21-day clock catches businesses that let flexible work requests sit unanswered, because silence hands the employee a direct path to a Commission order.

Both are preventable this week. Pull the list of fixed-term employees and their contract history, delete the extension options that exceed the limits, remove pay secrecy clauses from templates, and put a 21-day calendar reminder on every flexible work request that arrives. The SJBP Act's changes are now fully in force, and the employers who act on those four duties will be the ones who avoid the penalties, the Commission orders and the contracts that quietly became permanent.