Significant changes to the Fair Work Act: Protecting Worker Entitlements

On 30 June 2023 the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth) received Royal Assent and was passed into law (PWE Act). The PWE Act makes several key changes to the Fair Work Act 2009 (Cth) (FW Act) and related legislation, including expanding access to unpaid parental leave, introducing superannuation guarantee contributions as a new entitlement under the National Employment Standards (NES), and increasing protections for migrant workers.

The passage of the PWE Act is a critical step forward in ensuring that Australia’s workplace laws remain representative of the modern workplace.

In this alert, Special Counsel Damon King and Associate John Hickey from HopgoodGanim's Workplace and Employment team detail the significant changes to the FW Act through the passage of the PWE Act.

Summary of changes

A summary of the PWE Act's provisions and relevant commencement dates are set out below: 

Unpaid parental leave

The PWE Act improves access to unpaid parental leave by allowing working parents to take up to 20 weeks (previously 6 weeks) of their 52-week unpaid parental leave entitlement flexibly which aligns with recent changes to the Federal Government’s paid parental leave scheme. It is important to note, however, that the 20 weeks of flexible leave forms part of the 52-week entitlement – that is, it is not an additional entitlement, and the total amount of unpaid leave taken by an employee cannot exceed 52 weeks unless an extension of leave has been agreed to by the employer (discussed below).

The PWE Act also:

• permits employees to commence unpaid parental leave at any time in the 24-month period following the birth of their child, or the date of adoption of a child;
• removes barriers preventing employee couples from taking unpaid parental leave at the same time;
• grants pregnant employees the ability to access flexible unpaid parental leave in the 6 weeks prior to the expected birth of their child; and
• allows parents to request an extension of a further 12 months of unpaid parental leave (up to 24 months total) regardless of the amount of leave the other partner has taken.

These amendments aim to provide families, especially those who share caring responsibilities, with more options and flexibility concerning care and work responsibilities. Though, employees will remain subject to existing notice and evidence requirements within the FW Act when taking flexible unpaid parental leave.

In the case of a stillbirth or an infant death during the first 24 months of life, an eligible employee is still entitled to take up to 12 months unpaid parental leave. In this regard, an employer is unable to make an employee return to work, or cancel their unpaid parental leave, after a stillbirth or an infant death. If unpaid parental leave has started, and the employee wishes to return to work, the employee must give at least 4 weeks written notice to their employer cancelling the leave and providing a return to work date (the date being at least 4 weeks after the employer receives the notice). If the unpaid parental leave has not started, and the employee does not wish to take time off, the employee can cancel the unpaid parental leave by providing written notice.

Increased protections for migrant workers 

The PWE Act inserts a new provision in the FW Act to address its interaction with the Migration Act 1958 (Cth) (Migration Act). This change clarifies that any breach of the Migration Act (or instruments enacted under it) will not affect the validity of a contract of employment or contract for services for the purposes of the FW Act. The intention of this new provision is to ensure that migrant workers (including temporary migrant workers) working within Australia, are entitled to the benefit of the FW Act, irrespective of their immigration status or whether they have breached their visa conditions. Importantly, this new provision does not affect work rights (or consequences of non-compliance) under the Migration Act.

Workplace determinations

The PWE Act amends the FW Act to clarify that an enterprise agreement ceases to apply when it is replaced by a workplace determination, which was introduced by the recent changes to the FW Act under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth). A workplace determination is a determination made by the Fair Work Commission in relation to terms and conditions of employment of an enterprise, in circumstances where bargaining representatives for a proposed enterprise agreement could not agree. This is a minor and technical amendment to the FW Act that confirms the common understanding of how workplace determinations and enterprise agreements interact.

Employee-authorised deductions

Currently, the FW Act requires employees to provide their employer with a new written authority on each occasion that an authorised deduction amount varies. The PWE alleviates this administrative burden by expanding the circumstances in which employees can authorise their employer to make valid deductions from payments due to them, where the deductions are principally for the employee’s benefit. This change will result in employees being permitted to authorise their employer in writing to make regular deductions for amounts that vary from time to time, provided that the deductions are not for the direct or indirect benefit of the employer.

Superannuation a new entitlement under the NES

The PWE Act amends the FW Act to insert a new entitlement to superannuation contributions in the NES. Currently, employers are not explicitly required under the FW Act to make contributions to a superannuation fund for the benefit of their employees. Where an employer elects to not make superannuation contributions to its employees, they are instead required to pay the superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 (Cth).

The amendments under the PWE Act authorise employees, unions and the Fair Work Ombudsman under the FW Act to directly pursue employers for any unpaid or underpaid superannuation. In doing so, the PWE Act aims to supplement the Australian Taxation Office’s (ATO) broad regulatory powers to recover superannuation guarantee charge amounts where there is a superannuation guarantee shortfall. This is a significant change because employees are presently unable to directly pursue the underpayment of superannuation under the FW Act unless an entitlement is specifically included in their contract of employment (instead they must approach the ATO to deal with their claim regarding unpaid superannuation).

Importantly, once superannuation becomes a NES entitlement on 1 January 2024, employers will be subject to significant civil penalties under the FW Act for failing to make required superannuation contributions (as at 1 July 2023, the penalties are up to $18,780 per contravention for an individual and $93,900 per contravention for companies).

Black coal mining industry – long service leave scheme 

The PWE Act introduces several amendments to ensure casual workers in the black coal mining industry are treated no less favourably than their permanent counterparts. Significantly, the PWE Act introduces a fairer calculation of long service leave for casual coal mineworkers.

Currently, the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) limits the hours counted towards an employee’s long service leave to 35 hours per week, which disadvantages casual workers who ordinarily work a compressed fortnightly roster (i.e., longer hours in the first week and shorter hours in the second week).

The new amendments will ensure that the hours worked by casual workers in the black coal mining industry are fairly calculated for long service leave purposes. Further, the PWE Act makes it clear that the amount paid out as part of a casual employee’s long service leave entitlement must be inclusive of casual loading.

Key takeaways

It is critical for employers to familiarise themselves with the implemented and forthcoming amendments to the FW Act. Employers ought to ensure that their existing contracts, policies, procedures are up to date in compliance with the new amendments introduced by the PWE Act (particularly in relation to the improved unpaid parental leave entitlement, the enshrinement of superannuation as part of the NES, and the changes to employee authorised deductions).

If you require further information or assistance concerning these changes, please contact our Workplace and Employment team.