Bills Digest no. 38 2009–10
Long Service Leave Legislation Amendment (Telstra) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced: 16 September 2009
House: House of Representatives
Portfolio: Employment and Workplace Relations
Commencement: The Act commences, or is taken to have
commenced, on
23
November 2009.
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
To ensure
that federal public sector long service leave legislation continues to cover
Telstra's workforce until national long service leave provisions under the Fair
Work Act’s National Employment Standards come into effect.
Long service leave is a period of paid leave granted to
employees as a reward after a period of continuous employment (usually) with
the one employer. It is estimated that 21.3 per cent
of employees (2.2 million) were employed by their current employer/business for
10 years or more and thus are likely to qualify for long service leave credits.[1]
The Australian Labour Law Reporter traces the origin of the standard long
service leave entitlement to a 1964 decision of the then Commonwealth
Conciliation and Arbitration Commission. Its first arbitrated long service
leave award provided 13 weeks' leave after 15 years’ service, with pro rata
payment in lieu of termination after 10 years' service. For many years this was
the standard entitlement. However, New South Wales, Queensland and South
Australia, the Australian Capital Territory and the Northern Territory have since
adopted qualifying periods of 10 years or less, in State and Territory long
service leave legislation.[2] As is explained below, the Fair Work Act 2009 (FW Act) preserves State
and Territory long service leave entitlements for national system employees.
The background to long service leave entitlements of Telstra
employees was outlined in the Parliamentary Library’s Bills Digest no 40,
2006-07. It was noted that the long service leave entitlement of Commonwealth
Government employees is provided for under the Long Service Leave
(Commonwealth Employees) Act 1976. The basic qualification for long
service leave is that the person is, (or was), ‘employed in Government service’
and has been continuously employed in one or more forms of ‘qualifying service’
(that is, Commonwealth Government service or recognised prior service) for a
period of at least ten years.[3] The Telstra Corporation Act
1991 incorporates the Commonwealth long service leave entitlements for
Telstra employees in a number of provisions.
The Telstra (Transition to Full Private Ownership) Act
2005 inserted transitional and saving provisions in the Telstra
Corporation Act 1991 that protected employee long service leave
entitlements as well as paid maternity leave entitlements arising from pre-sale
employment service that otherwise would be foregone due to the sale of Telstra.
Telstra employees continue to accrue long service leave entitlements under the Commonwealth
Long Service Leave Act.
The Long Service Leave
(Commonwealth Employees) Amendment Act 2006 extended the operation of the Long Service Leave
(Commonwealth Employees) Act in respect of Telstra employees for a
period of three years after the day on which the Commonwealth would cease to
have a controlling interest in Telstra, ie to 24 November 2009. According to
then Minister for Employment and Workplace Relations, the Hon Kevin Andrews,
the reason for the three year extension was:
to allow Telstra and those employees who have not yet
concluded other arrangements a sensible time frame to first consider and then
make long service leave arrangements that will best suit their needs post
privatisation.[4]
The Rudd Government however
intends to develop a long service leave scheme in consultation with the States
and Territories for the national workforce. Currently, long service leave
constitutes one component of the ten employment conditions applicable to
national system employees under the National Employment Standards (NES) of the FW
Act.[5] The NES will come into effect on 1
January 2010.
The FW Act allows State and
Territory laws to continue to operate in respect of long service leave.[6]
In the absence of the proposed
national long service leave scheme, the NES will preserve long service leave
entitlements in pre-modernised awards from January 2010. If an employee does
not have applicable award-derived long service leave terms, any entitlement to
long service leave may be derived from State or Territory long service leave
legislation.[7] Minister Gillard’s initial award modernisation request to the Australian
Industrial Relations Commission specifically prevented the inclusion of long
service leave clauses in modern awards.[8] Discussions between state and federal workplace relations ministers aim to formulate
a standard long service leave clause under the NES over 2009-2010.
According to the Minister
Gillard’s second reading speech on this Bill, when the 2006 extension for
Telstra employees expires on 24 November 2009, Telstra will need to transition
from the Long Service Leave (Commonwealth Employees) Act to multiple State and
Territory schemes (per the FW Act), then back to a Commonwealth scheme when the
new NES long service leave arrangements are implemented.[9]
The provisions of this Bill provide
a further extension of Commonwealth long service leave standards for Telstra
employees until the Government puts in place new NES clauses in the FW Act providing
for long service leave.
The measures proposed in this Bill have no
impact on the budget.
Schedule 1 of the
Bill amends three Acts, namely the Telstra Corporation Act 1991 (the
Telstra Act), the Telstra (Transition to Full Private Ownership) Act 2005 (the Telstra Transition Act) and the Long Service Leave (Commonwealth
Employees) Act 1976 (the LSL Act)—the purpose of the amendments being to
extend the transitional long service leave arrangements that apply to Telstra
employees pending development of the national long service leave arrangements.
Division 1 of Part 3A of the Telstra Act currently sets out
the transitional arrangements that apply to the long service leave entitlements
of employees employed by Telstra at the time the LSL Act ceases to apply.
The Telstra Transition Act provides amongst other things,
for cessation of LSL Act coverage to Telstra employees. This cessation is
currently set at 24 November 2009, that is the third anniversary of
the ‘designated day’[10].
Items 8 and 9 in Schedule 1 are the main
amendments. They would amend the Telstra Transition Act with the effect
of allowing for the extension of the application of the LSL Act to Telstra for
a further period— namely until the ‘LSL changeover day’ which will be the day
when the national long service leave scheme is put in place.
Items 3 to 7 in Schedule 1 amend the Telstra
Corporation Act to reflect this extension of time. They mainly remove
references to ‘third anniversary of the designated day’ and replace them with
the phrase ‘LSL changeover day’. The ‘LSL changeover day’ is defined as ‘the
day on which item 4 of Schedule 1A of the Long Service Leave (Commonwealth
Employees) Regulations) is repealed or otherwise ceases to have effect’ (item
4).[11] The effect of these items is to ensure that the transitional arrangements with
respect to long service leave entitlements in the Telstra Act apply from LSL
changeover day, rather than the third anniversary of the designated day. While
complicated in its drafting, the intention is that change over day will
effectively be the day when the national long service leave scheme is put in
place.
The provisions of the Bill in effect, constitute a ‘transfer
of business’ mechanism, facilitating the preservation of an entitlement prior
to it being incorporated as a national standard.
Members, Senators and
Parliamentary staff can obtain further information from the Parliamentary
Library on (02) 6277 2463.
[2]. CCH, ‘Origins of the benefit’ The
Australian Labour Law Reporter at ¶32-830.
[11]. The Explanatory Memorandum explains that item 4
of Schedule 1A of the LSL Regulations is the mechanism through which the
LSL Act applies to Telstra. This will be repealed when the national long
service leave scheme is put in place.
Steve O'Neill
15 October 2009
Bills Digest Service
Parliamentary Library
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