Strengthened protections for workers in the new era of Fair Work

By Alison Baker, Iona Goodwin and Laura D’Aprano

The Senate has passed the Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023 (Cth), furthering the Federal Government’s industrial relations reform program by amending the Fair Work Act 2009 (Cth) (FW Act). The amendments to the FW Act include:

1. making the payment of superannuation one of the National Employment Standards;
2. addressing gender inequalities regarding access to parental leave;
3. clarifying the interaction between workplace determinations and enterprise agreements;
4. expanding the operation of the authorised deductions provisions; and
5. clarifying that a breach of the Migration Act 1958 (Cth) (Migration Act) does not impact an overseas worker’s contract of employment.

The changes to the FW Act relating to superannuation will come into effect on the first of the following dates to occur: 1 January, 1 April, 1 July or 1 October after the end of the six-month period after the Bill receives Royal Assent.

The parental leave changes will come into effect on the later of 1 July 2023 and the day after the Bill receives Royal Assent.

The amendments relating to authorised deductions will come into effect six months after the Bill receives Royal Assent.

The remaining changes will come into effect on the date after the Bill receives Royal Assent.

Superannuation a right under the National Employment Standards

The amendments create a new National Employment Standard requiring an employer to make superannuation contributions for its employees.

This amendment arguably introduces further complexity for employers. This new National Employment Standard will not apply to all employees. It will not apply to those employees who are ‘national system employees’ due only to a States’s referral of industrial relations powers to the Commonwealth (a referral necessary for Constitutional reasons). This is because the States’ referral of powers that is relied on under the FW Act only included superannuation to a limited extent.

Furthermore, the new National Employment Standard does not apply to all the organisations that are liable to pay superannuation under superannuation legislation because the superannuation legislation contains an expanded meaning of employee which is broader that the definition of national system employee in the FW Act.

The new minimum standard enshrines into workplace law the requirement that an employer covered by the standard must make contributions to a superannuation fund for the benefit of an employee covered by the standard so as to avoid liability to pay the superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 (Cth) in relation to the employee.

Effects of essentially creating a minimum entitlement to superannuation under the FW Act include that:

• employees will be able to make a claim under the FW Act directly against their employer in respect of non-payment of superannuation rather than relying on the ATO to take action in respect of superannuation;
• employers may be in breach of multiple legislative instruments where minimum superannuation contributions are not made;
• a court may order that an employer pay compensation for non-compliance with the new standard; and
• employers may also be liable for civil penalties under the FW Act for breaches of this new standard.

The amendments prevent multiple actions in respect of the same contravention. This means that an employee cannot bring a claim under the FW Act in respect of their employer’s breach of this standard in circumstances where the ATO has:

• instituted proceedings against the employer to recover superannuation guarantee charge amounts calculated on a superannuation guarantee shortfall; or
• obtained an order for recovery of the superannuation guarantee charge.

Broader access to parental leave

The amendments also broaden the scope of unpaid parental leave under the FW Act to remove current limitations on employee couples. Amendments include:

• an eligible employee may now begin their unpaid parental leave any time during the 24-month period starting from the date the child was born. Such an employee must end their unpaid parental leave within that same 24-month period, with the period of unpaid parental leave not more than 12 months.
• ‘concurrent leave’ is replaced with an entitlement to ‘flexible unpaid parental leave’ which will increase from 30 days to 100 days.
• A pregnant employee (whether permanent or casual) may take their flexible unpaid parental leave up to six weeks prior to the expected date of the child’s birth, subject to certain requirements.

Other amendments to the FW Act

Workplace determinations

To remove any doubt in respect of the interaction between a workplace determination and an earlier enterprise agreement, the FW Act will provide that when a workplace determination comes into effect in respect of an employee to whom an enterprise agreement otherwise applies, the enterprise agreement ceases to apply to the employee in relation to that employment and can never apply again.

Authorised deductions

Changes have been made in respect of the circumstances in which an employee can authorise their employer to make valid deductions from payments owed to the employee, where the deductions are principally for the employee’s benefit. Currently, employees must provide a new authorisation for each deduction. However, the amended FW Act will allow employees, in certain circumstances, to provide written authorisation for regular deductions for amounts which may vary from time to time.

Migration Act

The FW Act is also amended to provide that a breach of the Migration Act (or an instrument made under the Migration Act) does not affect the validity of a contract of employment, or the validity of a contract for services. This amendment does not affect work rights (or the consequences of non-compliance) under the Migration Act.

What does this mean for employers?

A failure to comply with the National Employment Standards brings with it the risk of pecuniary penalties and orders for compensation. These potential liabilities can now arise where an employer fails to comply with their superannuation obligations.

This is a timely reminder that from 1 July 2023, the superannuation guarantee increases from 10.5% to 11%.

The new parental leave provisions will require employers to be more flexible where they have employees seeking to access parental leave under the FW Act.

Employers should continue to be cautious in respect of the authorised deductions provisions of the FW Act. While the amendments offer some reduction in the administrative burden which accompanies obtaining authorisation for each deduction, we recommend the scope of any ongoing authorisations be narrow and subject to frequent review in consultation with the authorising employee.