Recent developments in managing employees in Australia

This edition discusses developments that employers should keep in mind to ensure legal compliance and best practice. These developments include managing AI in the workplace; developments in pay compliance, navigating officer due diligence obligations, and vicarious liability; the use of non-disclosure agreements in workplace sexual harassment complaints; and an update on industrial relations developments.

Recent legislative and case law developments have provided Australian employers with guidance in navigating numerous complex workplace challenges.

In this publication, we highlight several important developments that employers should keep in mind in order to ensure legal compliance and best practice.

Below are summaries of the key developments followed by the full publication to download.

AI in the workplace and the future of work

In brief:

• Following the rapid uptake of workplace AI in Australia, there has been increasing discourse on the potential opportunities and impacts of AI in the employment law landscape. There has been a particular focus on work health and safety implications, discrimination, transparency of AI-made decisions, and consultation with workers concerning the introduction of AI.
• The report handed down by the Senate Select Committee on Adopting Artificial Intelligence on 26 November 2024 and the report of the Federal Government's Inquiry into the Digital Transformation of Workplaces on 11 February 2025 herald the prospect of regulatory reform.
• Employers should anticipate that the advancement of AI technology will outpace any prospective reforms and look to develop their own strategies for consultation with workers and mitigation of risks in relation to AI.

Developments in pay compliance: Wage theft offence and increased penalties

In brief:

• Recent legislation has introduced changes to the regulatory regime relating to the underpayment of wages under the Fair Work Act 2009 (Cth).
• Since 27 February 2024, increased maximum penalties have applied for contraventions relating to the underpayment of wages, and there is a lower threshold to establish a 'serious contravention' of a civil penalty provision under the Fair Work Act.
• Since 1 January 2025, a new criminal offence of 'wage theft' has come into force. The offence occurs where a person engages in intentional conduct resulting in a failure to pay a required amount (other than superannuation and long service leave) to an employee in full. Significant penalties may be imposed, and individuals may also be subject to fines and up to 10 years' imprisonment.
• There is also a new regime allowing the Fair Work Ombudsman to enter into a 'cooperation agreement' with an employer who has self-disclosed a possible wage theft offence. As long as there is no inconsistency with the agreement, the regulator can still issue a compliance notice or enter into an enforceable undertaking with the employer.

Navigating officer due diligence obligations

In brief:

• For some time now, officers, such as company directors, have had a positive duty to exercise due diligence to ensure the person conducting a business or undertaking, of which they are an officer, complies with Model WHS laws.
• However, despite the age of these laws, there has been comparatively limited guidance from courts on how to comply with this obligation, particularly for larger businesses. Recently, we have seen some case law guidance emerge.

Use of non-disclosure agreements in workplace sexual harassment complaints

In brief:

• Non-disclosure or confidentiality agreements (NDAs) are commonly used in the context of workplace sexual harassment complaints to keep details of a settlement between an employer and the complainant confidential. NDAs can be drafted quite broadly and extend to details of the sexual harassment that was alleged, the identity of the harasser and any investigation into the matter. This has given rise to concerns that NDAs may contribute to a "culture of silence" around sexual harassment and be used to protect the employer and alleged harassers, rather than the person alleging workplace sexual harassment.
• In the wake of the MeToo movement and the Australian Human Rights Commission's Respect@Work Report, the use of NDAs has been in the spotlight. In 2022, the Respect@Work Council issued Guidelines on the Use of Confidentiality Clauses in the Resolution of Workplace Sexual Harassment Complaints. The Guidelines recommend that an employer consider whether an NDA is necessary in the particular workplace sexual harassment matter and, if it is, that the duration and scope of the NDA be as limited as possible.
• In response to recommendations by the Victorian Ministerial Taskforce on Workplace Sexual Harassment, the Victorian Government is progressing legislative reform to restrict the use of NDAs in workplace sexual harassment cases. The Victorian legislation would be the first of its kind in Australia and among the first in the world. The Taskforce recommended that Victoria use the Irish Employment Equality (Amendment) (Non-Disclosure Agreement) Bill 2021, and lessons from other jurisdictions, including the United Kingdom and the United States, as the model of reform in Victoria. We expect that any Victorian legislation will restrict the use of NDAs to specific circumstances, limit the scope of NDAs and potentially include a civil penalty regime for non-compliance by employers.
• Regardless of any legislative developments in this area, in our experience, the practice of using NDAs to resolve sexual harassment complaints in the workplace is changing. Employers are increasingly willing to tailor confidentiality terms within settlement agreements (e.g. to permit the complainant to speak with friends and family or medical advisers; and in some cases, to speak about the impact of the alleged conduct), or to not require confidentiality terms at all. Careful consideration of the use of NDAs is critical for employers seeking to meet their positive duty to take reasonable and proportionate measures to eliminate sexual harassment in the workplace as well as their workplace health and safety obligations.
  
  

High Court of Australia confines vicarious liability to employment relationships

In brief:

• The High Court of Australia has confirmed in Bird v DP (a pseudonym) [2024] HCA 41 that an employment relationship is necessary for a finding of vicarious liability. The Court declined to extend the concept to "employment like" arrangements, such as independent contracting.
• Vicarious liability is the attribution of liability of a wrongdoer to a defendant, despite the defendant being free of fault, where the act occurs in the course or scope of the relationship. The Court said that it is for the legislature to determine whether to extend vicarious liability beyond employment, and was not prepared to ascribe vicarious liability for the actions of a contractor or volunteer to the 'principal'. However, liability can arise separately through agency relationships, or from breach of a non-delegable duty (outlined below).

The new reality: An update on industrial relations

In brief:

• Employers have been coming to grips with the various "Closing Loopholes" changes which commenced over the last 12 months and will continue to develop over the coming months with a number of the reforms set to be tested in the Fair Work Commission.
• 2025 will provide employers with an opportunity to review and refine their industrial relations strategies and consolidate their policies and practices to ensure they reflect the changed industrial relations landscape.

Below are summaries of the key developments followed by the full publication to download.

Other authors: Max Moffat, Lawyer; Gabriella Lubrano, Lawyer.