Coalition Senators' Additional Comments

1.1Coalition Senators propose a number of amendments to this bill in order to provide greater certainty to both employers and their employees.

Superannuation

1.2The Coalition notes a number of concerns of stakeholders about the bill’s proposed changes to superannuation, which would give employees the right to pursue unpaid superannuation as a workplace entitlement.

1.3The Council of Small Business Organisations Australia (COSBOA) stated in their submission:

We are very concerned that this amendment creates yet further red tape and burden upon an employer to now report and substantiate superannuation payments to a second government regulator.[1]

1.4It is important that the Government clarify what extra reporting obligations will be required from Australian businesses as a result of their proposed changes.

1.5Australian businesses have had obligations to pay superannuation for a number of decades since the introduction of the Superannuation Guarantee Charge Act 1992, with the Australian Chamber of Commerce and Industry commenting in their submission that the ‘majority of employers are already compliant with these obligations’.[2]

1.6The Coalition notes there are a number of concerns from stakeholders about these proposed changes and their potential to create extra red tape for businesses, including confusion about whether that business should deal with the Australian Taxation Office (ATO) or the Fair Work Ombudsman (FWO) when it comes to superannuation matters.

1.7The Coalition welcomes provision in the legislation, through section 116D, which would prevent duplicate action through the ATO or the FWO, however, there are continued stakeholder concerns that these changes do not go far enough.

1.8The Australian Industry Group (Ai Group) states in its submission that:

The Bill should be amended to ensure that employers are not subject to any pecuniary penalty when they have adopted an approach to compliance with superannuation legislation that is consistent with current Administratively Binding Advice (ABA) or interpretive guidance issued by the ATO.

Section 116D only addresses the need to prevent enforcement proceedings under the FW Act if the Commissioner of Taxation has also commenced enforcement proceedings to recover an amount of superannuation guarantee charge from the employer in relation to the same employee.

It is conceivable that the limited scope of the Bill’s section 116D and the wide discretion of the courts afforded by current sections of the FW Act could enable an employer to be subject to a pecuniary penalty under the FW Act, notwithstanding that the employer may have followed the advice or interpretative guidance of another regulator in another jurisdiction; namely the ATO.[3]

1.9The Coalition believes amendments need to be made to this section of the bill to ensure that there are greater protections for businesses, particularly small and medium businesses, from penalties if they have previously relied on a ruling from the ATO.It is also important that businesses are not subject to extra red tape or reporting requirements when complying with their superannuation obligations.

Unpaid Parental Leave

1.10The Coalition supports parental leave, both paid and unpaid, as a means of ensuring that Australians are able to balance their work and family responsibilities and believe that parental leave greatly assists women, in particular, remaining connected to the workforce.

1.11Businesses of all sizes work closely with their employees to plan for periods of paid and unpaid parental leave, which will often last for a significant period of time.The Coalition notes that different businesses will have differing needs when it comes to planning for when an employee takes parental leave and believes that employers and employees working together to plan for these periods is best for both employers and employees.

1.12The Coalition notes the concerns of a number of stakeholders relating to the proposed changes to unpaid parental leave and their potential impact on the operation of a business when insufficient notice is given that an employee will be taking unpaid parental leave, particularly when a start and an end date of a period of leave is not nominated.

1.13The Coalition believes that amendments should be made to this bill which ensures that businesses are given sufficient notice when an employee wishes to access unpaid parental leave. The Coalition notes the suggestion that an employee should be required to nominate the intended dates for a particular period of leave, as proposed by Ai Group:

Section 74(3C), included as amended by the Bill, would not require an employee to advise their employer of the intended start and end dates of the flexible UPL, but only the total number of days. It is essential that section 74(3C) require employees intending to take flexible UPL to provide written notice of their intended dates, not just the number of days.[4]

1.14The nomination of specific dates for a period of leave is particularly important for small and medium businesses which may not have the resources to adequately plan for certain periods of leave at short notice. The Coalition proposes that the bill should be amended to clarify this matter.

1.15Coalition Senators also support COSBOA’s proposal to have a review into this part of the legislation six months after it has commenced.

Employee Authorised Deductions

1.16Schedule 5 is a particularly concerning part of this bill, which appears to reduce protections for Australian employees who have deductions made from their take home pay.The Liberal and National parties believe that Australians should be able to keep more of the money that they earn, and it is important that any deduction from their take home pay should be closely scrutinised.

1.17The ultimate effect of this change means that an organisation (such as a trade union or health insurer) which is in receipt of a deduction from an employee’s take home pay will benefit from a worker’s potential inattention to the cost of that deduction. If an increase to the deduction can be made without the employee having to agree, it is likely that prices will increase at a faster pace and fewer employees will opt out of having those deductions made. The overall effect will likely mean more revenue for the organisations which are in receipt of the deductions at the expense of the individual worker.This change makes it less likely that workers will opt out of contracts they no longer wish to have, because there is no requirement for their agreement to a price increase.

1.18Coalition Senators think it is appropriate that when there is an increase in the level of deduction being made to an employee’s take home pay, the employee concerned should have to agree to that cost increase.The Coalition does not oppose this process being streamlined, such as the employee being able to agree to the price increase electronically, but an increase to a deductible expense without the agreement of the employee is a principle we cannot support.

1.19Under this section of the bill, it appears that once an employee signs up to an agreement to have some of their pay deducted, the amount could be subject to potentially unlimited price increases without the employee being formally notified and relies heavily on the employee having to review their pay slip and challenge any particular deduction.Given that some employees do not directly receive or access their pay slips regularly, many employees will continue to pay for a service they no longer want without realising the true cost.Employees whose pay varies between pay periods (such as casual workers) are also less likely to notice an increase in deduction.

1.20COSBOA noted that this will also put an increase in administrative burden on employers:

This proposal will create additional administrative burden upon employers to take on the role of notifying employees of a change in the amount of a deduction due to actions of which the employee may not be aware.In order to minimise employee confusion, the employer will now have to instigate communication of changes whereas the current system of the employee requesting a change to their salary arrangements maintains a simple and understood process.[5]

1.21The result of these provisions in the bill is that the administrative burden for being made aware of a price increase to a take home pay deduction shifts to the individual employee and potentially the employer, which the Coalition does not consider to be appropriate.Being notified of a price increase for a particular product is an important protection for Australian consumers, which gives them the right to reconsider whether the product they are paying for is actually value for money.

1.22When an electricity provider, a health insurer, a bank or a streaming service such as Netflix increase their prices, it is only appropriate for consumers to be notified of that increase and then have the opportunity to reconsider whether they are receiving value for money and whether they should shop around for a better deal.If these increases were not notified, many consumers could be caught unaware that their prices have increased and pay a higher price than they would otherwise have agreed to.

1.23Employees should have similar protections for their take home pay deductions, but unfortunately this bill does not provide that assurance, but instead makes it easier for prices to increase without their agreement.It appears in this case that the Government is attempting to change this section of the Fair Work Act 2009 to benefit those who are in receipt of employee deductions, such as trade unions.

1.24Given union membership has fallen to 8 per cent of the private sector workforce, this appears to be the latest attempt to address a decline in union membership.Signing up to a union should not be like signing up to a timeshare agreement, and employees should be notified when the cost of that service increases and be given an opportunity to assess whether they wish to continue with that membership.

1.25As such, Coalition Senators propose that this section of the bill should be amended to ensure that an organisation which is in receipt of a deduction from an employee’s take home pay first get the agreement of that employee before that deduction is increased.

Coal Mining Long Service Long Service Leave Scheme

1.26Coalition Senators note the comments from stakeholders that technical amendments should be made to this section to better clarify what allowances are included as comprising the ‘ordinary rate of pay’ when calculating long service leave payments.In particular, the Ai Group submitted that:

… where a quantifiable casual loading is not discernible from an industrial instrument, the reference to ‘ordinary rate of pay’ should, if it is intended to encompass a casual loading, the Bill should specifically exclude any separately identifiable amounts apart from incentive-based payment, bonuses or the casual loading.[6]

1.27Coalition Senators believe the Government should review this provision to provide more clarity to employers and employees affected by these proposed legislative changes, including potentially amending the bill.

1.28The Coalition will continue to consult with stakeholders about this bill and consider any further suggestions or amendments to improve it.

Senator the Hon Michaelia Cash

Deputy Leader of the Opposition in the Senate and Participating Member

Liberal Senator for Western Australia

Senator Matt O'Sullivan

Deputy Chair

Liberal Senator for Western Australia

Senator Kerrynne Liddle

Member

Liberal Senator for South Australia

Footnotes

[1]Council of Small Business Organisations Australia (COSBOA), Submission 2, p. 2.

[2]Australian Chamber of Commerce and Industry, Submission 16, p. 10.

[3]Australian Industry Group (Ai Group), Submission 17, p. 18.

[4]Ai Group, Submission 17, p. 11.

[5]COSBOA, Submission 2, p. 3.

[6]Ai Group, Submission 17, p. 23.