More national workplace relations reforms on the horizon: Protecting Worker Entitlements Bill

Cilla Robinson, Rachel Hurwitz and Odette Brotherson
26 May 2023
Time to read: 7 minutes

Employers should consider how changes under a second tranche of workplace reforms may impact their workforce and how to practically address operational challenges presented by the new legal obligations.

While most are still wrapping their heads around the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act which passed in December last year, the Albanese Government is set to follow through on its pre-election promise to deliver significant reform to the national workplace relations system. The next tranche of reforms, the Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023 (PWE Bill), was introduced to Parliament on 29 March 2023.

After its debut in Parliament, the PWE Bill was referred to the Senate Education and Employment Legislation Committee for inquiry and its report was handed down on 28 April 2023. The Report brought together the views of a variety of different stakeholders and indicated there was widespread support for both the policy intents and specific schedules within the Bill. While stakeholders put forward some issues and points for clarification, they acknowledged the uncontroversial nature of many of the amendments.

The same Report indicates some opposition from the Coalition regarding the Bill's provisions relating to superannuation and employee authorised deductions. Despite this, there has been little opposition to what is otherwise considered to be a largely uncontentious Bill.

The PWE Bill proposes six key amendments:

Amendment Proposal
Migrant Workers

Confirming migrant workers will receive the protection of the Fair Work Act 2009 (Cth) irrespective of their immigration status.

Unpaid parental leave 

Improving access to unpaid parental leave (UPL) and complementing recent changes to the Paid Parental Leave Act 2010. 

Superannuation 

Inserting an entitlement to superannuation in the National Employment Standards (NES). 

Workplace determinations 

Clarifying the operation of the Fair Work Commission (FWC) workplace determinations and enterprise agreements. 

Employee-authorised deductions 

Expanding the circumstances in which employees can authorise employers to make valid deductions from payments due, where the deductions are principally for the employee’s benefit.

Long service leave for casual coal mineworkers  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 (LSL) entitlements under the Coal Mining Industry (Long Service Leave Funding) Scheme (Coal Mining LSL Scheme). 

Protections for migrant workers

The PWE Bill clarifies that a breach of the Migration Act 1958, or an instrument made under this legislation, does not affect the validity of a contract of employment or contract for services for the purposes of the Fair Work Act. This change ensures that migrant workers (including temporary migrant workers) are always entitled to the protection of the Fair Work Act, regardless of their immigration status. For example, a migrant worker who has contravened their visa would still be entitled to benefits under the Fair Work Act, including annual leave or notice of termination.

The Report indicated that this change was broadly welcomed by stakeholders, who believed that these reforms were long overdue and will provide better clarity and fairness for all workers moving forward.

This aspect of the PWE Bill would come into effect the day after Royal Assent.

Access to unpaid parental leave

The PWE Bill clarifies that a breach of the Migration Act 1958, or an instrument made under this legislation, does not affect the validity of a contract of employment or contract for services for the purposes of the Fair Work Act. This change ensures that migrant workers (including temporary migrant workers) are always entitled to the protection of the Fair Work Act, regardless of their immigration status. For example, a migrant worker who has contravened their visa would still be entitled to benefits under the Fair Work Act, including annual leave or notice of termination.

The PWE Bill will provide employees with stronger access to UPL and complement the recent changes to the Paid Parental Leave Act 2010 (PPL Act). It will also replace gendered language used for PPL and UPL with more gender-neutral terms.

The PWE Bill will amend the UPL provisions in the Fair Work Act to create consistency with the PPL Act which commenced in March 2023. These changes would allow employees:

  • to take up to 100 days (20 weeks) of flexible UPL;
  • to commence flexible UPL at any time in the 24 months following the birth or placement of the child; and
  • to take flexible UPL before or after a period of continuous UPL.

The intention of these changes is to facilitate a gradual return to work or to assist parents who share caring responsibilities. The PWE Bill will also provide more flexibility to pregnant employees by allowing them to take flexible UPL in the six weeks prior to the expected birth date of the child.

Relevantly, employees must give notice ten weeks (or as soon as practicable) before commencing UPL. Notice should include the start and end dates of their UPL and the total number of flexible UPL days they intend to take.

The PWE Bill also removes the provisions relating to "employee couples". The change would allow employees to take up to 12 months of UPL and request a further 12 months of UPL (maximum total of 24 months), regardless of how much leave the other parent takes. By removing "concurrent leave", the PWE Bill would allow employee couples to take UPL at the same time without limitation.

The Report suggests that submitters had mixed views on these changes. While stakeholders appreciated that increased flexibility would benefit employees, they also expressed concerns that these changes may impose complexity and regulatory costs from administering flexible UPL as an NES entitlement, and could discourage employers from adopting their own PPL schemes. They also pointed to the need to balance employee flexibility appropriately with operational business requirements.

This aspect of the PWE Bill would come into effect the day after Royal Assent.

Superannuation contributions

Employers are not explicitly required to pay superannuation to their employees by the Fair Work Act. The PWE Bill would change this by making superannuation an NES entitlement.

This would also create an additional mechanism for employees, unions, or the Fair Work Ombudsman to recover unpaid superannuation from employers. Employers who contravene the NES could be subject to a civil penalty or compensation. This regime is intended to complement the Australian Tax Office's (ATO's) existing powers to recover unpaid superannuation, with the Report confirming that employers would not be subject to multiple actions under the Fair Work Act and from the ATO for the same unpaid superannuation contributions. Stakeholders however argued that it adds another enforcement and penalty regime in addition to an already extensive and complex regime administered by the ATO. The Coalition has raised similar concerns.

A second, less contentious, change would align the Fair Work Act and the terms relating to superannuation in modern awards.

These changes would come into effect six months after the PWE Bill receives Royal Assent.

Employee-authorised deductions

The PWE Bill provides greater flexibility and additional safeguards for employee-authorised deductions.

Section 324 of the Fair Work Act currently permits employers to deduct an amount from their employees' pay where the deduction has been authorised by the employee in writing and is principally for the employee's benefit. Notably, a new written authorisation is required every time there is any variation to the deduction amount.

To ease the administrative burden on employees and employers, the PWE Bill proposes to allow employees to specify whether an authorised deduction is for a specified amount or can be varied from time to time. The proposed reforms also introduce an additional "reasonableness" requirement where an employee authorised deduction is directly or indirectly for the benefit of the employer (or related party) and is for an amount that may be varied from time to time, in line with the Fair Work Regulations. Currently, the Fair Work Regulations provide that the following three deductions are reasonable:

  • where an employer provides goods or services to an employee in the ordinary course of their business (eg., deductions for health insurance fees made by an employer that operates a health fund), except if the employee has to pay more than the general public for the goods or services;
  • where the purpose of the deduction is to recover costs directly incurred from an employee's private use of the employer's property (eg., personal items bought by an employee with a work credit card); and
  • where an employee has been overpaid because of a payroll error or because the employer mistakenly believes an employee is entitled to the pay, and the employee agrees to repay the money.

The Report suggests that the main benefit of this amendment is that it reduces the unnecessary administrative burden and the amount of red tape for employers making deductions. Yet, some stakeholders were more cautious about the change, suggesting that there were no issues with the current system.

The Coalition have expressed concern that in practice, a provision to this effect would benefit those who are in receipt of employee deductions (such as trade unions or health insurers) at the expense of the individual worker. While the opposition agree that this process should be streamlined, they have suggested an employee be able to agree to price increases electronically, on the principle that any increase to a deductible expense should require an additional agreement from the worker.

This aspect of the PWE Bill would come into effect 6 months and 1 day after Royal Assent.

Long service leave for casual coal mineworkers

The PWE Bill proposes several changes to ensure that casual employees are treated no less favourably than permanent employees in the black coal mining industry, as recommended by KPMG's 2021 Independent Review of the Coal Mining LSL Scheme.

One key change introduced by the PWE Bill with respect to casual coal mineworkers is the introduction of a fairer calculation of long service leave. The Coal Mining Industry (Long Service Leave) Administration Act 1992 currently limits the hours counted towards an employee's LSL to 35 hours per week, which unfairly disadvantages casual coal mineworkers who work a compressed fortnightly roster (ie. longer hours in the first week and shorter hours in the second). The new provisions would ensure that casual coalminers have their hours fairly counted towards LSL.

The PWE Bill also clarifies that the amount paid out as part of an employee's LSL entitlement must include casual loading. Importantly for employers, levies paid to the Coal Mining LSL Scheme will also need to include casual loading under the proposed reforms.

The Report conveyed overall support for these new changes, with some concern for the fact that casual workers could end up being treated more favourably than other workers. However, the Report confirmed that the changes would not create any additional entitlements nor unduly compensate casual workers.

More workplace reforms for the rest of 2023

The PWE Bill is unlikely to be the end of the road for workplace reforms in 2023. Major national workplace relations reforms are likely to be introduced into Parliament in the second half of 2023. The Department of Employment and Workplace Relations (DEWR) has been engaging in public consultation in relation to this third tranche of legislative reforms, focusing on 11 proposals:

  • stand up for casual workers;
  • same job, same pay;
  • criminalising wage theft;
  • extend the powers of the FWC to include "employee-like" forms of work;
  • give workers the right to challenge unfair contractual terms;
  • allow the FWC to set minimum standards to ensure the road transport industry is safe, sustainable and viable;
  • provide stronger protections against discrimination, adverse action and harassment;
  • a single national framework for labour hire regulation;
  • addressing the small business redundancy exemption in winding up scenarios under the Fair Entitlements Guarantee Scheme;
  • reforms to enterprise bargaining provisions to close loopholes; and
  • repeal demerger from registered organisations amalgamation provisions.

Consultation on the above proposals is well and truly underway with several consultation papers now released and submissions open for stakeholder comment.

Key takeaway

While these changes have received less coverage than the first and third tranche of reforms, it is important for employers to stay up to date given the rapidly evolving industrial relations landscape. The parental leave changes, whilst a positive development from a diversity, equity and inclusion perspective, are likely to have the biggest practical impact for businesses. With the new flexibility likely to be embraced by workers, organisations will need to have more complex contingencies in place to deal with the operational realities of increased employee flexibility when employees return to work following parental leave. Employers are encouraged to contact us if they have any specific concerns.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.