The Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 (Bill) was introduced into parliament last sitting week, following on from Minister Michaelia Cash’s announcement in early September.

A copy of the Bill and Explanatory Memorandum (EM) is available here.

The Bill has been referred to the Senate Education and Employment Legislation Committee for inquiry and report by 10 November 2017.

The Government has announced that this Bill is designed to protect worker entitlements that, through various different arrangements, are held for their benefit, whether that be for redundancy pay, sick leave or other employment benefits. There are many types of funds operating in a variety of different industries that hold funds which are designed to benefit workers in the event of a change in their circumstances.

The proposed legislation is in response to findings arising from the Royal Commission into Trade Union Governance and Corruption (Royal Commission). In essence, the Royal Commission recommended wide-ranging reforms for the oversight of funds created for the collection, holding and subsequent distribution of worker benefits. It has been reported that investment in these funds, with contributions often compulsorily required under terms of enterprise agreements, is in the region of $2 billion. While these funds have been likened to managed investment schemes that are usually subject to governance arrangements under the Corporations Act 2001, worker entitlement funds are currently not subject to this level of oversight.

The EM outlines key aspects of the Bill, include amendments to the Fair Work (Registered Organisations) Act 2009 (RO Act) to address:

• Registration of worker entitlement funds;
• Financial management and accountability, including monetary thresholds for reporting grants and loans made by a registered organisation and a range of other accountability measures;
• Reporting requirements related to the use of credit cards;
• Reporting requirements requiring specific disclosure by registered organisations and employers of the financial benefits obtained by them and persons linked to them in connection with employee insurance products, welfare fund arrangements and training fund arrangements; and,
• Additional penalties, offences and enforcement mechanisms.

Amendments to the Fair Work Act 2009 (FW Act) which will complement the accountability and management changes to the RO Act, include:

• Prohibiting the terms of a modern award or enterprise agreement requiring contributions for the benefit of an employee other than to a superannuation fund, a registered worker entitlement fund or a registered charity;
• Prohibiting the terms of a modern award, enterprise agreement or contract of employment requiring or permitting contributions to an election fund for an industrial association;
• Require any term of a modern award or enterprise agreement that names a worker entitlement fund or insurance product to allow an employee to choose another fund or insurance product;
• Prohibit any action (excluding protected industrial action) undertaken with the intent to coerce an employer to pay amounts to a particular worker entitlement fund, superannuation fund, training fund, welfare fund or employee insurance scheme.

The Bill also makes consequential amendments to the Fringe Benefits Tax Assessment Act 1986, Income Tax Assessment Act 1997 and Taxation Administration Act 1953.

This Bill, introduced on the heels of a range of other measures introduced by the Coalition Government in response to the 79 recommendations from the Royal Commission, introduces additional layers of transparency where employers are placed under industrial pressure to contribute to certain schemes as part of their industrial arrangements.  Legitimate, well managed and accountable funds subject to appropriate scrutiny and designed to house worker entitlements until such time as they need to be utilised will be allowed to continue to operate for the benefit of the workers whose money they hold.

These changes compliment legislation introduced earlier this year through the Fair Work Amendment (Corrupting Benefits) Act 2017 which prohibits the payment and receipt of corrupting benefits, and requires bargaining representatives to make disclosures around certain benefits being received. AREEA’s previous update on these changes is available here.

Debate on the Bill has been adjourned.

For further information, please contact AREEA’s policy team at [email protected].