Chapter 1Introduction
1.1The Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023 (bill) seeks to amend the Fair Work Act 2009 (FW Act) and related legislation to improve the workplace relations framework by protecting worker entitlements, including superannuation, addressing gender inequality and removing administrative burdens.
1.2The bill puts forward the following amendments:
confirming the status of migrant workers by addressing the interaction between the FW Act and the Migration Act 1958;
improving access to unpaid parental leave (UPL) and complementing recent changes to the Paid Parental Leave Act 2010;
inserting an entitlement to superannuation in the National Employment Standards (NES);
clarifying the operation of the Fair Work Commission workplace determinations and enterprise agreements;
expanding the circumstances in which employees can authorise employers to make valid deductions from payments due to employees, where the deductions are principally for the employee’s benefit; and
ensuring that casual employees working in the black coal mining industry are treated no less favourably than permanent employees in the accrual, reporting and payment of their long service leave entitlements under the Coal Mining Industry (Long Service Leave Funding) Scheme.
Context of the bill
1.3In December 2022, the Australian Government (government) passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act (Secure Jobs, Better Pay Act). That Act amended the FW Act, Fair Work (Registered Organisations) Act 2009, the Building and Construction Industry (Improving Productivity) Act 2016, and related legislation to make a range of changes to Australia's industrial relations framework.
1.4In his second reading speech, Minister for Employment and Workplace Relations, the Hon. Tony Burke MP stated that the bill currently before the committee builds on the amendments of the Secure Jobs, Better Pay Act. Minister Burke said that:
Secure Jobs, Better Pay was about raising the bar—raising the bar on awards, raising the bar on enterprise agreements, raising the bar on bargaining and lifting the floor for workers. This year, it's about closing the loopholes that some businesses use to undercut those arrangements. This bill is the first step.
1.5The Department of Employment and Workplace Relations (DEWR) explained that the bill implements ‘technical and clarifying amendments to modernise, embed and extend basic protections’ into the FW Act.
The Jobs and Skills Summit
1.6On 1 and 2 September 2022, the government held the Jobs and Skills Summit (Summit) at Parliament House in Canberra, which brought together businesses, unions, civil society, and the federal, state, and territory governments.
1.7The Summit was led by the Prime Minister, the Hon. Anthony Albanese MP, and the Treasurer, the Hon. Dr Jim Chalmers MP, and it and the subsequent White Paper were to focus:
keeping unemployment low, boosting productivity and incomes;
delivering secure, well-paid jobs and strong, sustainable wages growth;
expanding employment opportunities for all Australians including the most disadvantaged;
addressing skills shortages and getting our skills mix right over the long term;
improving migration settings to support higher productivity and wages;
maximising jobs and opportunities from renewable energy, tackling climate change, the digital economy, the care economy and a Future Made in Australia; and
ensuring women have equal opportunities and equal pay.
1.8Following the Summit, the government agreed to 36 immediate initiatives, including stronger protections for migrant workers, better access to unpaid parental leave, and ensuring workers and businesses have flexible options for reaching agreements.
Overview of the bill
1.9The bill contains eight schedules, which would amend the FW Act and related legislation in relation to protecting worker entitlements.
Schedule 1 – Protection for migrant workers
1.10Schedule 1 of the bill would insert a new provision at the end of Division 4 of Part 1-3 of the FW Act to deal with the interaction between the FW Act and the Migration Act 1958.
1.11The provision responds to recommendation 3 of the inter-agency Migrant Workers’ Taskforce, in its Report of the Migrant Workers’ Taskforce of March 2019, which recommended that:
… legislation be amended to clarify that temporary migrant workers working in Australia are entitled at all times to workplace protections under the Fair Work Act 2009.
1.12The amendments also respond to recommendation 3 of committee’s previous inquiry into the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, where it called for legislative amendments clarifying that the protections and entitlements under theFair Work Act 2009apply regardless of immigration status.
1.13The effect of the item is that a breach of the Migration Act 1958, or an instrument made under it, does not affect the validity of a contract of employment or contract for services for the purposes of the FW Act. This would ensure that migrant workers (including temporary migrant workers) working in Australia would be entitled to the benefit of the FW Act regardless of immigration status.
1.14DEWR explained that these amendments address concerns ‘expressed by some advocates for temporary migrant workers that Australian workplace laws and conditions are unclear in how they apply to temporary migrant workers’.
Schedule 2 – Unpaid parental leave
1.15Schedule 2 of the bill progresses outcomes of the Summit, in providing stronger access to unpaid parental leave (UPL), and complements recent changes to the Paid Parental Leave Act 2010 (PPL Act).
1.16The NES provides for a UPL entitlement for all national system employees, and entitles eligible employees to take up to 12 months of UPL, ‘which must generally be taken as a single continuous period’ under the NES. As explained by the bill’s Explanatory Memorandum (EM):
The existing provisions allow employees to access up to 30 days of their entitlement as flexible UPL days, which may be taken a day at a time within the first 24 months of the child’s birth or adoption placement. Flexible UPL days are an exception to the requirement that UPL must be taken in a single continuous period. Under the current provisions, once an employee takes a day of flexible UPL, the employee forfeits any remaining entitlement to take continuous UPL.
1.17The bill’s amendments seek to increase the portion of flexible UPL an employee may take under section 72A of the FW Act, to align with the changes made to the paid parental leave scheme by the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Act 2023 (2023 PPL Act).
1.18The bill would also allow the entitlement to flexible UPL to be taken before, as well as after, a period of continuous UPL taken under section 71 of the FW Act.
1.19The EM explains that the Bill would further strengthen access to UPL and remove barriers to parents sharing caring responsibility by:
allowing employees to commence UPL at any time in the 24 months following the birth or placement of their child;
removing barriers preventing employee couples from taking UPL at the same time;
allowing pregnant employees to access flexible UPL in the six weeks prior to expected birth of their child;
allowing parents to request an extension to their period of UPL, regardless of the amount of leave the other parent has taken;
removing provisions relating to ‘employee couples’ and allowing all employees to take up to 12 months UPL and request a further 12 months of UPL, regardless of how much leave their partner or spouse takes; and
removing the concept of ‘concurrent leave’ and allowing employees to take UPL at the same time, without limitation.
1.20The bill also amends references to ‘maternity leave’ throughout the FW Act, to be replaced with the term ‘parental leave’.
1.21The EM states the amendments would give families more choice and flexibility in how they combine their care and work responsibilities, and will encourage parents to share caring responsibilities and facilitate parents’ ongoing engagement in the workforce in the early stages of their child’s life. The EM concludes that:
The amendments would overall increase flexibility in how eligible employees choose to take UPL and promote opportunities for shared parenting arrangements, while ensuring parents who take leave post-birth are not disadvantaged.
Schedule 3 – Superannuation contributions
1.22Employers must pay the superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 (SGC Act), if they do not make contributions to a superannuation fund for the benefit of their employees.
1.23In his second reading speech, Minister Burke made the point that the FW Act does not currently have an explicit requirement for an employer to pay superannuation to their employees, and argued that:
This is a loophole that needs to be closed. In almost every instance of wage theft, superannuation is also part of how workers have been ripped off. This amendment is about making sure that a worker can recover both superannuation and wages in an underpayment claim under the Fair Work Act. Until now, many workers have had to claim the take home pay and superannuation through two separate processes.
1.24Accordingly, Schedule 3 of the bill would insert a new Division into the FWAct to provide a new entitlement to superannuation contributions in the NES. It would also make it a requirement for employers to make contributions to a superannuation fund for the benefit of an employee, so as to avoid liability to pay the superannuation guarantee charge under the SGC Act in relation to the employee.
1.25Proposed new section 116B of the FW Act would also provide a right for Australian workers to pursue their unpaid superannuation as a workplace entitlement, with the amendments intending to ‘establish a mechanism through which a broad range of employees … could enforce and recover unpaid superannuation’. The importance of this provision is noted by the EM, which says that:
Establishing an obligation to make superannuation contributions as a minimum entitlement in the NES is also intended to reinforce the Government’s position that underpayment of superannuation is a form of wage theft and worker exploitation.
1.26The EM explains that there would also be ramifications for contravention of these new provisions:
An employer who contravenes this proposed entitlement to superannuation contributions could be subject to a civil penalty, as is the current position for all contraventions of the NES. It would also be open to a court to make other orders, including compensation, if these proposed provisions are contravened.
1.27Part 2 of Schedule 3 would make a consequential amendment to section 149B of the FW Act, to ensure alignment between the new Division in the FW Act and the terms relating to superannuation in modern awards.
1.28DEWR advised that the changes would come into effect at the beginning of the first financial quarter, six months after Royal Assent—which would:
… align the NES entitlement with the requirements under superannuation legislation for employers to make contributions on behalf of employees on a quarterly basis in order to avoid liability for the superannuation guarantee charge.
Schedule 4 – Workplace determinations
1.29Schedule 4 includes more minor and technical amendments. DEWR noted that the amendments of Schedule 4 make clear the common understanding that ‘when a workplace determination made by the Fair Work Commission commences operation, an enterprise agreement that was previously in place ceases to operate’.DEWR further clarified that:
This measure will not disrupt the application of determinations previously made by the Fair Work Commission. It provides consistency and certainty for parties by confirming that workplace determinations that came into operation before this amendment replaced any earlier enterprise agreement.
Schedule 5 – Deductions
1.30Minister Burke, in presenting the bill explained the background to the Schedule 5 provisions:
For a long time, workers have signed deduction forms which are frequently used for both for both union membership and health insurance, and they've signed them in the knowledge that payments may vary from time to time. At any stage, workers can decide whether they want the deduction to continue. There have been some legal questions raised as to whether the initial deduction authority can continue if fees change over time.
1.31Schedule 5 therefore proposes amendments to section 324 of the FW Act to expand the circumstances in which employees can authorise employers to make valid deductions from payments due to employees, only where the deductions are principally for the employee’s benefit.
1.32According to the EM, employees would be permitted to authorise employers, in writing, to make regular deductions for amounts that vary from time to time, provided that the deductions are not for the direct or indirect benefit of the employer. In other words, ‘where an employer offers deductions, an employee will be able to choose whether they authorise only a set amount be deducted or whether they authorise an ongoing deduction for an amount that varies from time to time’.
1.33The EM further explains that:
The provision currently requires employees to provide employers with a new written authority on each occasion the amount of an authorised deduction varies. This creates an administrative burden for employers complying with the provision.
1.34According to DEWR, it remains open to an employee to choose to specify a monetary cap on the level of variation they are authorising. Further, the bill’s amendments offer additional protections for employees by providing that, ‘subject to certain exceptions, variable deductions cannot be made where they directly or indirectly benefit the employer’. DEWR concluded that:
The Bill has reduced as far as possible unnecessary administrative burden associated with the changes. Employers may continue to make deductions in accordance with existing authorisations if they comply with the current provisions, until those authorisations are withdrawn or updated. Employers may also make authorised deductions in reliance on authorisations made before the commencement of the provisions, if those authorisations comply with the new provisions.
Schedule 6 – Coal long service leave scheme changes
Background
Coal Long Service Leave Scheme
1.35The Coal Mining Industry (Long Service Leave Funding) Corporation (Corporation) is the Australian Government corporation established to regulate and manage long service leave entitlements on behalf of eligible employees in the black coal mining industry. Prior to the establishment of the Coal Mining Industry (Long Service Leave) Funding Scheme (Coal LSL), retention of workers in the industry was a challenge, and portable long service leave was identified as an important requirement to retain skills and support industry longevity.
1.36Payroll levies are collected from employers of eligible employees on behalf of the Australian Government, and the LSL levy is a mandatory employer tax which does not come out of employee wages. Levies are held in a pooled investment Fund which is managed by the Corporation’s investments division to ensure financial provision for eligible employees’ long service leave entitlements across the industry. Coal LSL allows employees in the black coal mining industry to carry their LSL entitlements with them.
1.37An independent report of December 2021, entitled Enhancing certainty and fairness: Independent Review of the Coal Mining Industry (Long Service Leave Funding) Scheme, reviewed the Coal LSL Scheme and made 20recommendations to improve the Coal LSL Scheme for employers and employees.
1.38Recommendation 4 of the independent review called on the Commonwealth to ‘enact legislative amendments to ensure that casual employees are treated no less favourably than permanent employees in the Scheme’.
Amendments by the bill
1.39Schedule 6 would legislate the government’s commitment to implementing recommendation 4 of the independent review, ensuring that casual employees are treated no less favourably than permanent employees in the Coal LSL Scheme.
1.40The bill puts forward several amendments to better support casual employees in the black coal mining sector, including:
amendments to include casual loading in the definition of ‘eligible wages’ for the purposes of levy collection, and in the payment of the employee’s long service leave entitlement, to address ‘confusion about whether the meaning of ‘eligible wages’ includes casual loading’;
expanding the meaning of ‘qualifying service’ under the Coal Mining Industry (long Service Leave) Administration Act 1992, to deem that certain weeks where a casual employee does not work due to specific rostering arrangements are periods of qualifying service, and to insert a rule-making power to allow for sufficient flexibility should it become apparent other non-rostered weeks for a casual employee should also be prescribed as counting towards qualifying service;
changing the method for calculating a casual employee’s ‘working hours’ per week so that they more closely align with the employee’s actual working hours, enabling fairer accrual of the employee’s long service leave entitlements; and
requiring the Corporation to publish the form of the employer return on the Federal Register of Legislation via notifiable instrument, and to consult with the Secretary of DEWR before approving the form; this will ‘result in greater transparency regarding the Scheme’s reporting requirements’.
Schedule 7 – Technical corrections
1.41Schedule 7 of the Bill would make minor technical amendments to paragraphs 237(2)(c) and 771(d) of the FW Act to correct typographical errors, and which do not alter the meaning of the provisions being amended.
Schedule 8 – Application and transitional provisions
1.42According to the bill’s EM, Schedule 8 amends the FW Act and related legislation to make application, saving, transitional and miscellaneous consequential provisions arising from the amendments made by the bill.
Financial impact
1.43The EM outlines the financial impacts of the bill, primarily in relation to Schedule 6 and the amendments to the in relation to the Coal LSL.
1.44The Schedule 6 amendments would result in employers of casual employees in the black coal mining industry paying a levy on ‘eligible wages’, which includes casual loading, into the Coal Mining Industry (Long Service Leave) Fund.
1.45The EM goes on to explain that despite these amendments, the financial impact on coal long service leave scheme is expected to be minimal:
The employer can seek a reimbursement from the fund after paying an eligible employee for their long service leave entitlement. The employer will be reimbursed from the Fund at the higher rate (which includes casual loading) despite having paid levy into the fund prior to commencement at the lower rate. The Fund will cover any shortfall of levy payments in order not to disadvantage employees. Given the relatively small number of casuals covered by the Coal LSL Scheme, the financial impact is unlikely to be significant or have an immediate impact on fund viability.
Consideration by other parliamentary committees
1.46When examining a bill, the committee considers any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
1.47At the time of writing, neither the Scrutiny Committee nor the Human Rights Committee had considered the bill; however, the statement of compatibility with human rights, included in the bill's explanatory memorandum, concluded that the bill is compatible with the Human Rights (Parliamentary Scrutiny) Act 2011 because it ‘advances the protection of human rights, including labour rights’.
1.48Specifically, the bill would positively engage with the rights to work and the rights in work; promote employees’ right to work on just and favourable conditions; promote equality and non-discrimination, and engage positively with the rights of parents and children.
Conduct of the inquiry
1.49On 30 March 2023, the Senate referred the bill to the committee for inquiry and report by 28 April 2023. The committee completed its inquiry based on the submissions received and other information published about the bill.
1.50The committee advertised the inquiry on its website and invited submissions by 14 April 2023. The committee received 21 submissions from organisations, which are listed at Appendix 1 of this report. The public submissions are available on the committee's website.
1.51The committee thanks those organisations who contributed to this inquiry by preparing written submissions.