Coal Mining Industry (Long Service Leave) Legislation Amendment Bill 2011

Bills Digest no. 56 2011–12

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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.

Steve O'Neill
Economics Section
12 October 2011

Contents
Purpose
Financial implications
Key provisions
Concluding comments 


Date introduced:  21 September 2011
House:  Senate
Portfolio:  Education, Employment and Workplace Relations
Commencement:  Sections 1–3 on the day of Royal Assent; Item 1 of Schedule 4 retrospectively on 1 January 2010; and all other provisions on 1 January 2012.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/bills/. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The primary purpose of the Coal Mining Industry (Long Service Leave) Legislation Amendment Bill 2011 (the Bill) is to provide a minimum long service leave entitlement for all eligible employees in the black coal mining industry based on the pre modern award standard. The Bill will also:

  • change the basis on which the employer levy which funds long service leave entitlements is imposed, and facilitate change to the employer reimbursement arrangements
  • extend the minimum long service leave entitlement to part-time and casual employees in the black coal mining industry
  • re-define the definition of eligible wages’ to reflect actual remuneration practices, and
  • provide for the Board of the Corporation to make Employer Reimbursement Rules which will set out how the amount the Corporation will reimburse an employer is to be determined.

Background

Long service leave (LSL) benefits were granted to black coal miners under an industrial award of the former Coal Industry Tribunal in 1949.[1] Introducing the legislation to fund the LSL arrangements, the then Minister for Defence and Minister for Post-War Construction, John Dedman, MP, stated:

... it would be impracticable for the cost of the leave to be made the full financial responsibility of the individual employers... During their working lives, many employees have changed from one employer to another, and it would be inequitable to place the cost of all such employment solely upon present day employers.  Some collieries are not financially capable of meeting the additional cost involved by the leave.  Many employees have been employed in the past by colliery companies that are no longer in existence. Moreover, employers would be reluctant to employ men with previous employment in the industry because of the additional liability for long service leave that their employment would involve. This would tend to make labour less mobile than is desirable within the industry, and could result in a loss of skilled labour to the industry...

Broadly, the scheme now placed before the House in this interdependent set of three measures is that an excise of 6d. a ton will be placed upon coal produced by those employees in the coal-mining industry who will receive the benefit of long service leave. The proceeds of this excise will be placed in the Commonwealth trust fund and from this fund the Treasurer of the Commonwealth will be empowered to make grants to the States.[2]

The coal LSL funding arrangements were reviewed in 1990. The review found the production levy to be inefficient and inequitable because company contributions bore no direct relationship to their long service leave costs. In particular, less labour intensive open cut mines were effectively subsidising more labour intensive underground mines.[3]

The coal mining LSL scheme operates as follows:

  • award provisions set the rate of long service leave accumulation in the industry for employees
  • [4] created the Coal Mining Industry (Long Service Leave Funding) Corporation (the Corporation). It operates in New South Wales, Queensland, Western Australia and Tasmania. It is managed by a joint union‑management board
  • to the Corporation via the Coal Industry (Long Service Leave) Payroll Levy Act 1992 (LSL Payroll Levy Act)[5]
  • [6] into consolidated revenue
  • funds are transferred back to the Corporation by the relevant government department, the Department of Education, Employment and Workplace Relations
  • the Corporation manages funds, tracks entitlements and reimburses employers for their cost of meeting employee long service leave entitlements and
  • [7]

Award-based long service leave was terminated under the Fair Work system.[8] Accordingly, provision was made via the Coal Mining Industry (Long Service Leave Funding) Amendment Act 2009 to maintain LSL entitlements through the payroll levy and Commonwealth transfers to the Corporation on behalf of all eligible employees, including non-award employees from 1 January 2010.[9]

Basis of policy commitment

The Minister’s second reading speech notes that the Bill gives effect to proposals developed by a Coal Industry Working Party (made up of industry employer organisations and unions) to reform the portable LSL and other arrangements in the black coal mining industry.

Committee consideration

At its meeting on 22 September 2011, the Senate Selection of Bills Committee deferred consideration of the Bill until its next meeting.[10]

Financial implications

According to the Explanatory Memorandum which accompanies the Bill, the Bill ‘does not impact on Commonwealth finances’.[11]

Standing appropriation

The Coal Mining Industry (LSL) Funding Act 2011 (when enacted) appears as a special appropriation ($118 million pa), based on an industry levy to the Commonwealth which is returned to the Fund, managed under Program 5.1 of the Department of Education, Employment and Training’s portfolio Budget Statements.[12]

Key provisions

Schedule 1—Long service leave entitlement

Part 1— Main amendments

The LSL Funding Act provides for the LSL funding scheme in the black coal mining industry by:

  • establishing the Corporation
  • requiring the Corporation to establish and maintain the Coal Mining Industry (Long Service Leave) Fund (the Fund) and to make payments out of the Fund to employers in the industry to reimburse them for long service leave payments made to eligible employees and
  • appropriating money for the purposes of the Fund in respect of the amounts of payroll levy paid by employers under the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992 (Payroll Levy Collection Act).[13]

Items 1– 23 insert new definitions into section 4 of the LSL Funding Act, many of which are in the same terms as other statutes such as the Fair Work Act 2009 (Fair Work Act).

Item 24 inserts new paragraph 7(da) into the LSL Funding Act to require the Corporation to maintain records relating to coal mining employees eligible to be covered by the Fund and their employers.

Item 25 inserts new Part 5A which relates to entitlement to LSL into the LSL Funding Act with the following provisions:

Entitlement, amount and grant

Proposed subsection 39A(1) establishes a qualifying period of eight years for an ‘eligible employee’ to be entitled to LSL.[14] Proposed subsection 39A(2) details what is and what is not ‘qualifying service’ for the purposes of the LSL Funding Act. In particular, certain absences do not count as qualifying service while others such as a period of stand down do constitute service. Proposed paragraph 39A(2)(c) provides that where an employee ceases to be an eligible employee for a continuous period of eight years, known as a ’break period’, then any period before the break period will not be qualifying service. However, proposed subsection 39A(4) allows for paragraph 39A(2)(c) to be disregarded in the event that the employee becomes an eligible employee again.

Proposed section 39AA sets out the number of hours of LSL that an eligible employee is entitled to for each week of qualifying service completed using the formula:

                (13 ÷ 416) x ‘working hours’

The amount of ‘working hours’ differs depending on whether the eligible employee is full-time, part‑time or casual.

Proposed section 39AB provides that an eligible employee may apply in writing to take a period of LSL, as long as the period is a single continuous 14 day period and does not exceed the employee’s ‘LSL credit’.[15] Proposed subsection 39AB(3) requires the employer to respond to the request within 14 days after the application was made.

Proposed section 39AC stipulates payment for LSL taken by an employee equal to the employee’s ‘base rate of pay’ (including incentive payments and bonuses).[16] This is a civil penalty provision. Item 26 of Schedule 1 to the Bill inserts proposed Part 7A into the LSL Funding Act which provides that pecuniary penalties are payable for contraventions of civil penalty provisions.

Proposed section 39AD stipulates that the employer must pay the employee taking LSL at the same time as wages would have been paid, or in advance where this is requested by the employee and authorised by an industrial instrument. Similar to proposed section 39AC, this is a civil penalty provision.

Proposed section 39AE provides that a period of LSL taken over a public holiday reduces the LSL taken by that day/s. Proposed subsection 39AE(2) provides that LSL taken is also reduced by any day/s taken as community service leave during the period of LSL.

Waiver agreements

Proposed section 39B allows an employee and employer to make an agreement to provide the employee with additional remuneration, or to have additional contributions made to a superannuation fund nominated by the employee, in lieu of LSL that the employee would otherwise have accrued. The value of the additional remuneration/contribution must equal or be greater than the amount of payroll levy which would have otherwise have been payable by the employer. Proposed subsections 39B(3) and 39B(4) set out the formal requirements for such an agreement.

 

Proposed section 39BA allows a waiver agreement to be varied by the employer and employee provided that the variation is in writing, signed, date of effect specified and lodged with the Corporation by the employer. Similarly, proposed section 39BB allows a waiver agreement to be terminated by the employer and employee providing it is in writing, signed, the agreement’s date of effect is specified and written notice of the termination is advised by the employer to the Corporation stipulating the date of termination.

 

Proposed section 39BC sets out the duties and considerations the Corporation must take into account when approving or refusing to approve waiver agreements and variations to them. Under proposed subsection 39BC(4), a refusal to approve a waiver agreement, or a variation, may be referred to the Administrative Appeals Tribunal for review.

 

Proposed sections 39BD and 39BE confirm that an employee who is subject to a waiver agreement is not an eligible employee for the purposes of accruing LSL and if a waiver agreement is in effect, the employer must pay the additional remuneration.

Payments on cessation of employment as an eligible employee

Proposed section 39C requires the employer to pay the employee no less than the amount that would have been payable to the employee had the employee taken LSL before termination, within 30 days of the request being made. Under proposed subsection 39C(2), where an employee has died and had a period of untaken LSL, the employee’s legal personal representative may receive the accrued leave payment.

 

In addition, proposed section 39CA allows an employee who ceases employment on the grounds of ill health or who retires at the age of 60 years to request LSL payment, including for periods of service which amount to less than the LSL qualifying period (eight years).

 

Proposed section 39CB allows an employee who is made redundant to apply for LSL payments in respect of six years or more service.

 

Proposed section 39CC allows an employee’s legal personal representative to make a claim for the employer to pay accrued LSL to the employee’s legal personal representative upon his death, including for accruals which amount to less than the LSL qualifying period.

 

Proposed section 39CE allows an employee who has received a LSL payment on ill health, retirement grounds and is re-employed in the industry to qualify to count previous service as qualifying service unless the break in employment has been for eight years but the employee cannot be paid for the LSL previously paid.

Remedies relating to long service leave

Proposed section 39D allows Fair Work Australia to deal with coal industry LSL disputes as if the matter was brought to it under its general dispute hearing powers.[17]

Proposed section 39DA allows employee organisations and industrial associations to represent their members’ interests in coal industry LSL matters brought before the Federal Court or the Federal Magistrates Court. Proposed section 39DB allows the Federal Court or the Federal Magistrates Court to make the following orders in coal industry LSL disputes: compensation for loss; orders for injunctions and any other order considered appropriate.

Relationship with other laws and industrial instruments

Proposed sections 39E and 39EA make clear that the Coal Mining Industry (Long Service Leave) Legislation Amendment Act 2011 (when enacted) displaces any state and federal laws dealing with coal industry LSL. However, superior LSL provisions which may be provided in industrial instruments will stand: proposed section 39EB.

Item 26 inserts a new Part 7A—Civil Penalty Orders into the LSL Funding Act.

Obtaining a civil penalty order

Proposed section 49A allows the Corporation on behalf of the Commonwealth to obtain an order for payment of a pecuniary penalty from the Federal Court or the Federal Magistrates Court against a person who is alleged to have contravened the LSL Funding Act. That application must be made within six years of the alleged contravention. The court may order (known as a ‘civil penalty order’) a person to pay a pecuniary penalty if satisfied that the person contravened the civil penalty provision: subsection 49A(3). Proposed 49AC allows the court to make a single penalty order for multiple contraventions.

Civil proceedings and criminal proceedings

Proposed section 49B prevents a court from making a civil penalty order against a person who had been convicted of a criminal offence for substantially the same conduct.

Proposed section 49BA stays civil penalty proceedings where any criminal proceedings have commenced in relation to the person for the same or similar conduct. Criminal proceedings may be commenced against a person alleged to have contravened a civil penalty provision.

Proposed section 49BC prevents evidence being given in civil proceedings being used in criminal proceedings, other than when evidence has been given falsely in the civil proceeding.

Miscellaneous

Proposed section 49C prevents a person from contravening a civil penalty provision, or from aiding, abetting or conspiring to contravene such provisions.

Proposed section 49CB sets out the circumstances which will establish the defence of mistake of fact against an alleged contravention of a civil penalty provision, such as being under a mistaken, but reasonable, belief about the facts that caused the contravention.

Proposed section 49CD provides that where an element of a civil penalty provision is done by an employee, agent or officers of a body corporate, acting within the scope of their employment, then the element will also be attributed to the body corporate. Similarly, under proposed section 49CE, an executive officer of a body corporate contravenes the civil penalty provisions if the body corporate contravened the civil penalty provision, the office knows that the contravention would occur and could influence the conduct and the officer failed to take reasonable steps to prevent the contravention. The test of whether an executive officer took reasonable steps to prevent the contravention of a civil penalty provision is contained in proposed section 49CF.

Item 29 inserts new sections 52A–52D. Proposed section 52A empowers the Corporation, by notice in writing, to require persons to produce information and documents relevant to the Corporation performing its functions under the LSL Funding Act, if it believes on reasonable grounds that the person has the information and/or the documents. Where the Corporation has given written notice to a person, the person must comply with it. This is a strict liability provision under proposed subsection 52A(5) and a civil penalty provision under proposed subsection 52A(7).

Proposed section 52B provides that certain decisions of the Board of the Corporation can be reviewed by the Administrative Appeals Tribunal.

Proposed section 52C provides that jurisdiction is conferred on the Federal Court and the Federal Magistrates Court in relation to any civil matter and outlines the circumstances in which the jurisdiction conferred on the Federal Court is to be exercised in the Fair Work Division of the Federal Court.

Regulations pertaining to the LSL Funding Act may include requirements for coal industry employers to maintain certain employment records pertaining to eligible employees under proposed subsection 54(2).

Part 2—Amendments relating to funding

Items 32–34 make further amendments to the definitions in subsection 4(1) of the LSL Funding Act.

Item 37 repeals subsections 43(1)–43(4) replacing them with new section 43 requiring the Corporation to seek actuarial advice every three years as to the appropriate rate of the payroll levy.

Item 40 repeals sections 44–46 and replaces them with new sections 44–45. Proposed section 44 requires the Corporation to reimburse employers who have made LSL payments to eligible employees in accordance with proposed Part 5A. Proposed section 45 requires the Corporation to make employer reimbursement rules, by legislative instrument, relating to LSL payments and to create notional LSL accounts for each eligible employee from 1 January 2012.

Item 41 repeals sections 48, 48A and 48B and replaces them with new section 48. Proposed section 48 allows the Corporation to pay LSL to eligible employees whose employer has become insolvent.

Part 3—Other amendments

Item 43 retitles the LSL Funding Act as the Coal Mining Industry (Long Service Leave) Administration Act 1992 (the Administration Act).

 

Item 50 makes a consequential amendment to the LSL Payroll Levy Act.

 

Items 51–55 make consequential amendments to the LSL Payroll Levy Collection Act.

Schedule 2—Constitution of the Board

Items 3–5 of Schedule 2 to the Bill amend section 13 of the LSL Funding Act to provide for changed appointments to the Board of the Corporation (the Board). Under existing section 12 of the LSL Funding Act, the Board consists of six Directors.

The amendments do not alter the total number of Directors. Rather, they operate so that there will be:

  • one director to represent the companies engaged in black coal mining in New South Wales or Tasmania: proposed subsection 13(2)
  • one director to represent companies engaged in black coal mining in Queensland: proposed subsection 13(2A)
  • one director to represent the companies engaged in black coal mining in Western Australia: existing subsection 13(3)
  • two directors from the Mining and Energy Division of the Construction, Forestry Mining and Energy Union: proposed subsection 13(4) and
  • one director to represent other unions and certain Associations: proposed subsection 13(5).

Schedule 3—Levy and collection arrangements

Part 1—Amendments relating to levy

The amendments in Schedule 3 to the Bill relate to the LSL Payroll Levy Collection Act. Section 11 of that Act sets out the functions of the Corporation, being:

  • to receive returns made, or financial statements or certificates given, under the Act
  • to receive payments of levy, or additional levy that are made and
  • to sue for and recover, amounts of levy and additional levy that have not been paid.

Consistent with item 1 of Schedule 1 to the Bill, item 1 of Schedule 3 to the Bill inserts into existing section 3 of the LSL Payroll Levy Collection Act the definition of ‘base rate of pay’. That term has the same meaning as in the Fair Work Act.

Item 4 inserts new section 3B which defines the meaning of ‘eligible wages’ to be the greater of either:

  • the base rate of pay to an employee, including incentive payments or
  • 75 per cent of the base rate of pay including bonuses and incentives, overtime or penalty rates and other work related allowances (excluding expenses).

Where remuneration is paid as an annual salary, ‘eligible wages’ are the salary including incentive payments but excluding overtime and penalty rates: proposed subsection3B(2). Eligible wages for casuals are comprised of the base rate of pay including incentive payments and bonuses: proposed subsection3B(3).

Part 2—Amendments relating to audit and reporting requirements

Item 10 repeals and relaces subsection 5(1) and 5(1A) with new subsection 5(1) requiring an employer who employs an eligible employee at any time during a month, to make a return within 28 days of the end of that month. Item 11 provides that this subsection is a civil penalty provision and a contravention of the subsection is an offence of strict liability. Item 9 repeals and replaces section 4 so that payment of the levy in respect of the eligible wages paid to an eligible employee is paid at the same time that the return is required under item 10 above.

Item 13 repeals and replaces subsections 9(3) and 9(4) with new subsection 9(3) which requires the Corporation to detail payments, recoveries and any legal actions in relation to these in its annual report.

Item 14 repeals section 10 and inserts new sections 10, 10A and 10B. Proposed section 10 requires coal industry employers to forward to the Corporation, no later than six months after the end of the financial year, a statement from an auditor as to the correctness of the payments made by the employer to the Corporation for the payroll levy in respect of the employer’s eligible employees. Proposed section 10A authorises the Corporation to require a report to the same effect from an employer’s auditor, by notice in writing to the auditor. Proposed section 10B requires the employer to meet the costs of the auditor except where the Corporation requests the report, in which case the Fund reimburses the cost to the employer.

Items 15, 16, 18 and 20 amend various provisions to express penalties in penalty units, rather than dollar amounts, consistent with other Commonwealth statutes.

Schedule 4—Amendment of the Coal Mining Industry (Long Service Leave Funding) Amendment Act 2009

Schedule 4 to the Bill amends the Coal Mining Industry (Long Service Leave Funding) Amendment Act 2009 which commenced on 1 January 2010.

Item 1 amends subitem 1(4) of Schedule 2 of the above Act to include periods of employment from 1 January 2000 and 31 December 2011, as employment of an eligible employee.

Item 2 repeals the Act’s Schedule 2 with effect from 1 January 2012.

Schedule 5—Transitional provisions

Schedule 5 to the Bill establishes a regime for transition from the award-derived long service leave scheme to the new statutory long service scheme established by the Bill.

Recognition of long service leave–eligible employees

Item 2 of Part 2 requires the Corporation to calculate an eligible employee’s long service leave from 1 January 2000 to 31 December 2011. If the periods of ‘qualifying service’ add up to at least eight years, then the employer must also calculate the employee’s entitlement in hours to LSL under Part 5A.

Item 3 enables former eligible employees to provide details to the Corporation of their service in the black coal industry from 1 January 2000 to 31 December 2011 so that from 1 January 2012 it can be included as service for LSL purposes.

Item 4 ensures that entitlements under this Schedule do not displace any entitlement for award‑derived long service leave.

Item 5 prevents the service worked under an Australian Workplace Agreement to be included as LSL service where the AWA excluded an LSL entitlement and periods already taken as LSL.

Keeping records of recognised long service leave

Item 6 obliges the Corporation, by 30 September 2012, to inform eligible employees of the records the Corporation has pertaining to the employee’s employment as an eligible employee before 1 January 2012; the employee’s employers before that date and the employee’s qualifying service and LSL entitlement. An employee may correct the information that the Corporation holds and if the Corporation agrees, it must advise both the employee and the employer of any correction.

Item 7 obliges the Corporation, by 31 December 2012, to inform former employees of the records the Corporation has pertaining to that employee’s service prior to 1 January 2012; the employee’s employers and the employee’s qualifying service for LSL and the LSL entitlement.

Item 8 provides that periods of service arising from award derived long service leave terms count as service under Part 5A of the LSL Funding Act (as amended by this Act).

Concluding comments

The coal mining industry long service leave scheme is one of long standing and has been the subject of review and amendment in the past. The Bill does not significantly extend the scheme but does confer additional responsibilities on the Coal Mining Industry LSL Corporation in order to provide better access to LSL entitlements by eligible employees.



[1].       P Reith, Review of funding arrangements for long service leave in the black coal mining industry: report to the Minister for Workplace Relations and Small Business, June 1998, p. 15, viewed 3 October 2011, http://dpl/Books/2001/ReviewFundLSLBlackCoalMining.pdf

 

[2].       J Dedman (former Minister for Defence and Minister for Post-war Reconstruction), ‘Second reading speech: State Grants (Coal Mining Industry Long Service Leave) Bill 1949’, House of Representatives, Debates, 20 October 1949, p. 1754, viewed 7 October 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22hansard80%2Fhansardr80%2F1949-10-20%2F0117%22

[3].       P Reith, Review of funding arrangements for long service leave in the black coal mining industry: report to the Minister for Workplace Relations and Small Business, op. cit., p. 17.

[4].       Parliamentary Research Service, Coal Mining Industry (Long Service Leave Funding) Bill 1992, Bills Digest, Parliamentary Library, Canberra, 8 May 1992, viewed 7 October 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FORT00%22

[5].       Department of Education, Employment and Workplace Relations, Annual report 2009-10, p. 143, viewed 2 October 2011, http://www.deewr.gov.au/Department/AnnualReport/Documents/DEEWRAnnualReport2009_10I.pdf

[6].       Parliamentary Research Service, Coal Mining Industry (Long Service Leave) Payroll Levy Collection Bill 1992, Bills Digest, Parliamentary Library, Canberra, 11 May 1992, viewed 7 October 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2FCRT00%22

[7].       The reason for the transfer is that the levy is, in effect, a tax and for constitutional reasons must be paid into consolidated revenue from where an equivalent sum is appropriated back to the Corporation. P Reith, Review of funding arrangements for long service leave in the black coal mining industry: report to the Minister for Workplace Relations and Small Business, op. cit.

[8].       The modern awards under the Fair Work Act 2009 do not provide for long service leave.  Instead, long service leave is stipulated as a national standard under that Act’s National Employment Standards: section 113, Fair Work Act 2009.

[9].       S O’Neill, Coal Mining Industry (Long Service Leave Funding) Amendment Bill 2009, Bills Digest, no. 69, 2009–10, Parliamentary Library, Canberra, 24 November 2009, viewed 7 October 2011, http://www.aph.gov.au/library/pubs/bd/2009-10/10bd069.pdf

[10].      Selection of Bills Committee, Report no. 13 of 2011, Senate, Canberra, 22 September 2011, viewed 7 October 2011, http://www.aph.gov.au/Senate/committee/selectionbills_ctte/reports/2011/rep1311.pdf

[11].      Explanatory Memorandum, Coal Mining Industry (Long Service Leave) Legislation Amendment Bill 2011, p. ii.

[12].      Department of Education, Employment and Workplace Relations, DEEWR budget statements 2011-12, p. 133, viewed 2 October 2011, http://www.deewr.gov.au/Department/Budget/Documents/20112012/2011-2012_DEEWR_PBS_07_Outcome_5.pdf.

[13].      Section 3, LSL Funding Act.

[14].      The term ‘eligible employee’ is defined in section 4 of the LSL Funding Act and that definition is unchanged by this Bill, although the Bill does extend employees’ service for the purposes of LSL eligibility.

[15].      Proposed subsection 39AB(5) sets out how to calculate an eligible employee’s ‘LSL credit’.

[16].      Item 1 of Schedule 1 to the Bill inserts the definition of ‘base rate of pay’ into section 4, LSL Funding Act. The term has the same meaning as in the Fair Work Act.

[17].      Section 738 of the Fair Work Act refers.

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