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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