Thinking | 30 March 2022

Federal Budget 2022-23: implications for Australian employers

The 2022-23 Federal Budget has revealed additional funding to enhance the Paid Parental Leave (PPL) scheme, provide extra funding to the Fair Work Commission (FWC), the Fair Work Ombudsman (FWO), and the Office of the Australian Information Commissioner (OAIC), and plans for consultation regarding amending the National Employment Standards (NES).

The rationale for these measures is to boost the capabilities of Commonwealth agencies, improve economic security for women, and provide businesses with more scope to retain staff and negotiate flexible working arrangements.

Changes to the NES

The Government has stated that it intends to consult with key stakeholders on how the NES should be amended to:

  • ensure that redundancy payment calculation methods more fairly reflect average working hours over the course of a person’s employment; and
  • extend unpaid leave entitlements to foster and kinship carers.

The Government says it aims to ensure that changes to redundancy entitlements under the NES will improve fairness and equity for women (who are more likely to move between full-time and part-time work due to caring responsibilities). The projected extension of leave entitlements for foster and kinship carers is recognition of the vital contributions these carers make to the community.

Enhancing the PPL Scheme

The Government will provide $346.1 million over five years from 2021-22 to enhance the PPL scheme by rolling the Dad and Partner Pay into Parental Leave Pay to create a single scheme of up to 20 weeks, fully flexible and shareable for eligible working parents.

The changes aim to remove barriers to women’s workforce participation and encourage more men to access these entitlements.

Eligible working parents will be able to access paid parental leave at any time within two years of the birth or adoption of their child. The income test will be adjusted to include a household income threshold of $350,000 a year. Currently, a family is not entitled to PPL if the mother earns more than $151,350 a year and the partner has no, or a much lower, income. Adjusting the income test as planned seeks to improve economic security for women who are the primary earner and do not have access to employer-funded parental leave.

Extra funding for the FWC, FWO and the OAIC

The Government will provide $5.6 million over four years from 2022-23 to the FWC to establish a dedicated unit to support small businesses, including with unfair dismissal and general protections disputes.

The FWO will receive $2.7 million in 2022-23 to extend the FWO’s support to businesses and employees on COVID-19 workplace issues until 30 September 2022.

The OAIC will receive $17 million over two years from 2022-2023 to enhance its ability to undertake its privacy and regulatory functions including in relation to social media and other online platforms and responding to privacy complaints.

Implications for employers

The extent and impact of the potential changes to the NES remain to be seen. These are contingent on consultation to occur at some time in the future (and after an election which will have significant implications for what happens next).

However, employers should be aware they may face changes to the minimum terms and conditions of their employees, including that redundancy obligations may well increase (and perhaps be more complicated to calculate). If unpaid leave is extended as projected, these employees will gain an important entitlement which, as a workplace right, brings with it additional legal protection.

The enhanced PPL scheme aims to ensure greater flexibility for eligible working parents about how and when to access PPL. The changes to the scheme also seek to support employers to retain valuable staff and provide more options when negotiating flexible working arrangements with their employees. Employers should also consider how the enhanced scheme will operate alongside their existing parental leave policies.

It is not clear yet how the planned new unit within the FWC to support small business will work from a practical perspective. However, support for small business in relation to unfair dismissals and general protections claims (which can be costly and time consuming) can only be a good thing.

The additional funding for the OAIC flags that privacy will continue to be an increasingly important issue for Australian businesses.

As mentioned, there is an election literally around the corner. This means that this year, knowing what the Opposition plans for these matters will be crucial for businesses. Stay tuned.

This article was written with the assistance of Nate Cheng, Law Graduate

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