Download Submission to the Department of Education, Employment and

Submission to the Department of Education, Employment
and Workplace Relations and the Fair Work Ombudsman
Workers’ compensation and leave entitlements
3 November 2011
Master Builders Australia Ltd
ABN 68 137 130 182
Master Builders Australia Ltd.
© Master Builders Australia Ltd, 2011
This publication is copyright and all rights are reserved. No part of it may be reproduced, stored,
transmitted or otherwise distributed, in any form or by any means without the prior written permission
of the copyright holder.
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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1
INTRODUCTION
This submission is made by Master Builders Australia Ltd (Master Builders).
Master Builders is Australia’s peak building and construction industry association,
federated on a national basis in 1890. Master Builders’ members are the nine
Master Builder State and Territory associations.
Over the past 120 years the association has grown to represent over 30,000
businesses nationwide. Master Builders is the only industry body that represents
all three building and construction sectors: residential, commercial and
engineering.
2
BACKGROUND AND PURPOSE OF THIS SUBMISSION
This submission summarises research undertaken by Master Builders concerning
the interaction between State and Territory workers’ compensation entitlements
and leave accrual under the Fair Work Act 2009 (Cth) (Fair Work Act). This
research was instigated following employer concerns that, from a policy
perspective, employees should not be able to ‘double-dip’ by receiving paid leave
entitlements while being separately remunerated under workers’ compensation
schemes.
This issue has (in part) been addressed by the Fair Work Act, which at section
130 prima facie excludes accrual of leave entitlements where an employee is
absent from work and receiving workers’ compensation. However, because this
exclusion is subject to State and Territory laws and only applies to entitlements
under the National Employment Standards (NES), in practice a close examination
of State and Territory regulation, along with the terms of modern awards and
enterprise agreements, is required to answer whether or not employees on
compensated absences are entitled to accrue leave. This submission primarily
focuses on the whether annual leave is able to accrue for employees on
compensated absences, as an example of the complex interaction between
these various instruments.
Master Builders’ analysis has been provided to the Department of Education,
Employment and Workplace Relations (DEEWR) and the Fair Work Ombudsman
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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(FWO) in order to gauge some regulatory responses to the conclusions reached
in this submission. We would appreciate it if the FWO could indicate whether it
agrees with the analysis in this submission. As far as Master Builders is aware,
the question of the interaction between workers’ compensation regimes and
leave entitlements under the Fair Work Act has not been the subject of significant
research to date. Master Builders considers that the uncertainty arising from the
Fair Work Act’s ‘reference back’ to State and Territory workers’ compensation
schemes makes this an important area for clarification and harmonisation,
potentially in the context of the forthcoming review into the Fair Work Act.
Master Builders would ask DEEWR to consider recommending to the Hon
Senator Chris Evans, Minister for Tertiary Education, Skills, Jobs and Workplace
Relations that the Fair Work Act be amended in order to clarify the matters raised
in this submission.
DEEWR and the FWO are also invited to establish a
mechanism for discussing those issues with relevant State and Territory
counterparts. Master Builders would be happy to participate in any forum so
established. The matter could also be referred to members of the National
Workplace Relations Consultative Committee for consideration of agreed
stakeholder changes.
3
ANNUAL LEAVE AND WORKERS’ COMPENSATION UNDER THE FAIR
WORK ACT
A four-week minimum standard of paid annual leave is provided to full-time
federal system employees under the NES of the Fair Work Act.1 Section
130(1) of the Fair Work Act indicates that such leave will not accrue nor can
be taken where an employee is absent from work and is receiving workers’
compensation (a compensated absence). Section 130(1) is in the following
terms:
1
Fair Work Act, sections 86-94.
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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130
Restriction on taking or accruing leave or absence while
receiving workers’ compensation
(1)
An employee is not entitled to take or accrue any leave or
absence (whether paid or unpaid) under this Part during a
period (a compensation period) when the employee is
absent from work because of a personal illness, or a
personal injury, for which the employee is receiving
compensation payable under a law (a compensation law)
of the Commonwealth, a State or a Territory that is about
workers’ compensation. [emphasis added]
Importantly, section 130(2) indicates that section 130(1) ‘does not prevent an
employee from taking or accruing leave’ if this is ‘permitted’ by State and
Territory workers’ compensation laws.2 Accordingly, an examination of the
terms of State and Territory workers’ compensation regimes is required to
answer whether or not an employee on a compensated absence is entitled
to accrue leave. Those State and Territory laws are considered at section 4
of this submission. Because section 130(1) is also directed at leave ‘under
this Part’ (i.e. Part 2-2 of the NES) it is also necessary to consider whether
leave provided under modern awards or enterprise agreements (rather than
the NES) can avoid the terms of the exclusion at section 130(1), a
consideration discussed at section 5 of this submission.
4
STATE AND TERRITORY WORKERS’ COMPENSATION LAWS
Each State and Territory has enacted workers’ compensation legislation.
Such laws were preserved during the transfer of State and Territory
industrial relations powers to the Commonwealth with the passage of the
Fair Work Act.3 Where those laws explicitly provide for annual leave-taking
This ‘carve-out’ for State and Territory workers’ compensation laws is a reverse of its predecessor
provision under the Workplace Relations Act 1996 (Cth), which at section 237 stated that any
restrictions on annual leave accrual under State and Territory workers’ compensation laws would
continue to apply. No explanation appears to have been given for this change: Fair Work Bill 2008
(Cth), Explanatory Memorandum, items 507-509; Workplace Relations Amendment (Work Choices)
Bill 2005 (Cth), Supplementary Explanatory Memorandum, item 102. The only restrictions appear to
be in New South Wales, South Australia and Tasmania, although those jurisdictions broadly provide
for accrual.
2
3
Fair Work Act, subsection 27(2)(b).
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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or accrual, they will apply to all employees on compensated absences within
those States and Territories. However, where State and Territory workers’
compensation laws are silent about annual leave-taking or accrual, Master
Builders considers that the exclusion at section 130 of the Fair Work Act will
apply (at least towards entitlements under the NES).
While most State and Territory workers’ compensation laws do provide for
annual leave-taking and accrual for employees on compensated absences,
some do not, while others place limits on the way in which leave accrues or
may be taken. A summary is provided at Attachment A to this submission.
Safe Work Australia has also conducted similar research in this area,
although on the question of annual leave accrual it is somewhat out of date.4
Jurisdictions where annual leave does not accrue
Annual leave does not accrue and cannot be taken during compensated
absences in the Northern Territory, Victoria or Western Australia, as the
workers’ compensation legislation in those jurisdictions is silent on the
question of annual leave-taking and accrual.5 This means that the exclusion
at section 130 of the Fair Work Act applies, at least towards entitlements
under the NES.
Jurisdictions where annual leave does accrue
The jurisdictions where annual leave does accrue and may be taken during
compensated absences are the Australian Capital Territory, Queensland,
South Australia, Tasmania and arguably, New South Wales. In those
jurisdictions, annual leave would accrue and may be taken as per the terms
Comparison of Workers’ Compensation Arrangements in Australia and New Zealand (Safe Work
Australia, March 2011) see section 8.1, pp 352-354;
http://safeworkaustralia.gov.au/AboutSafeWorkAustralia/WhatWeDo/Publications/Pages/comparison2
011.aspx (accessed 23 September 2011). State and Territory workers’ compensation authorities also
have useful information. A list these authorities and their contact details is available from the Fair
Work Ombudsman’s website: http://www.fairwork.gov.au/Links/pages/default.aspx#occupationalhealth-and-safety (accessed 23 September 2011).
4
5
Workers Rehabilitation and Compensation Act (NT); Accident Compensation Act 1985 (Vic);
Workers’ Compensation and Injury Management Act 1981 (WA).
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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of an employee’s relevant common law contract, modern award or enterprise
agreement. However, any restrictions on the manner in which leave accrues
or may be taken under the workers’ compensation legislation in that State or
Territory would still apply, subject to the terms of a modern award, enterprise
agreement or common law contract, which could expressly override such
restrictions.6
In the Australian Capital Territory7 and Queensland8 there are no such
qualifications on leave-taking or accrual and annual leave would simply
accrue as if the employee were present at work. It is also reasonably clear
that annual leave accrues in Tasmania9 and South Australia,10 although
some restrictions apply.11 More uncertain is whether annual leave accrues
in New South Wales. While Master Builders considers that the Workers
Compensation Act 1987 (NSW) does not directly indicate that annual leave
6
Some restrictions on how annual leave accrues exist in New South Wales, South Australia and
Tasmania. As a general principle, modern awards, enterprise agreements and common law contracts
are able to provide for entitlements that are superior to minimum entitlement regulation.
7
Workers’ Compensation Act 1951 (ACT), section 46.
8
Workers’ Compensation and Rehabilitation Act 2003 (Qld), section 119A.
Subsection 84(1) of the Workers’ Rehabilitation and Compensation Act 1988 (Tas) states that if
during a compensated absence ‘there occurs any period during which the worker would be entitled…
to be absent… on annual recreational leave [or long service leave] on full pay’ then that entitlement
must be provided within three months of return to work or concurrently with the compensated
absence. While the terms of section 84 are not immediately clear, the of section 84 are not
immediately clear. However, when taken together with the ‘Notes on Clauses’ for the Workers’
Compensation Bill 1988 (Tas) for (the then) clause 84 states that the provision ‘provides, subject to
the provisions of any relevant industrial award or agreement provisions, for annual leave to accrue
during periods of incapacity for which compensation is payable under the Act’ (emphasis added).
9
10
Workers’ Rehabilitation and Compensation Act 1986 (SA) subsection 40(2).
11
In Tasmania, where an employee has not taken annual leave (or long service leave) during a
compensated absence, ‘a similar period of leave… in lieu of’ such leave must be provided within three
months of the employee’s return to work. However, if leave is taken during a compensated absence,
no workers’ compensation will be payable for that period of leave; Workers’ Rehabilitation and
Compensation Act 1988 (Tas), section 84. In South Australia, those with a ‘total incapacity’ for 52
weeks are considered to have been given any annual leave that accrued during that period (although
annual leave loading must still be paid); Workers’ Rehabilitation and Compensation Act 1986 (SA),
sections 40(3), 40(4). An ambiguity about whether any leave entitlements accrued on a compensated
absence must be taken as payment in lieu, due to section 40(5) of the Workers’ Rehabilitation and
Compensation Act 1986 (SA).
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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accrual is preserved for employees on compensated absences,12 we note
that WorkCover NSW considers that leave does accrue, based on its internal
advice and industry consultation.13 We consider that resolution of the true
intent of the Workers Compensation Act 1987 (NSW) in this regard will
require tribunal or court consideration or State Government action.
5
ACCRUAL UNDER MODERN AWARDS/ENTERPRISE AGREEMENTS
For those States and Territories where annual leave-taking and accrual is
not expressly provided to employees receiving workers’ compensation (i.e.
the Northern Territory, Victoria and Western Australia) the exclusion at
section 130 of the Fair Work Act will apply. However, it may still possible for
an enterprise agreement, modern award or common law contract to provide
for such entitlements, contrary to section 130.
That is because section 130 of the Fair Work Act only excludes accrual and
leave-taking where those entitlements arise under the NES.
Subsection
130(1) states that ‘an employee is not entitled to take or accrue any leave or
absence… under this Part’ (emphasis added) i.e. Part 2-2 of the Fair Work
Act – the NES.14 It is therefore clear, we submit, that section 130 is not
intended to ‘cover the field’ by restricting leave accrual under all industrial
instruments, agreements or common law contracts.
12
The only reference to annual leave is at section 49 of the Workers Compensation Act 1987 (NSW),
which states that ‘Compensation is payable under this Division to a worker in respect of any period of
incapacity for work even though the worker has received or is entitled to receive in respect of the
period any payment, allowance or benefit for holidays, annual holidays or long service leave under any
Act (Commonwealth or State), award or industrial agreement under any such Act or contract of
employment’. On its face, section 49 only provides that workers’ compensation must be paid, despite
the fact that other leave, such as annual leave, may be available. In other words, it is directed at the
preservation of worker’s compensation entitlements, rather than continuing accrual of annual leave.
13
Section 49 has also been held by the Australian Industrial Relations Commission to provide for
accrual of leave (and leave-taking) in Construction, Forestry, Mining and Energy Union v Cooks
Construction Pty Ltd (unreported, AIRC, Drake SDP, PR967884, 2 February 2006). However, the
leave in that case accrued under a general definition of ‘service’ in an enterprise agreement which was
not subject to the exclusion at section 130 of the Fair Work Act.
14
The NES are Divisions 3 to 12 of Part 2-2 of the Fair Work Act: subsection 61(3). While this includes
the annual leave entitlements set out at Division 6, it does not include Division 13, under which section
130 falls. Accordingly a modern award or enterprise agreement cannot ‘supplement’ section 130.
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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Master Builders considers that enterprise agreements and modern awards
could provide for leave-taking and accrual to employees on compensated
absences in two ways.
The first is that a modern award or enterprise
agreement could specifically provide that leave accrues and may be taken
even when an employee is on a compensated absence. The second is by
‘supplementing’ the terms of the NES, such that the leave entitlement could
be said to arise under a modern award or an enterprise agreement, rather
than the NES. The latter argument, which produces some fairly anomalous
outcomes, is considered in more detail below.
While enterprise agreements and modern awards must not exclude the
NES,15 they may ‘supplement’ them.16 As noted, section 130 of the Fair
Work Act only excludes accrual and leave-taking where those entitlements
arise under the NES. Accordingly, where annual leave entitlements can be
said to arise under a modern award or an enterprise agreement (rather than
the NES) it is arguable that it will not be subject to the exclusion at section
130.
The degree of supplementation is crucial. Section 55(6) of the Fair Work Act
indicates that to the extent that superior terms in a modern award or
enterprise agreement ‘give an employee an entitlement… that is the same
as an entitlement… under the [NES]’ then ‘those terms operate in parallel
with the employee’s NES entitlement’ (emphasis added). This means that
the ‘provisions of the [NES] relating to the NES entitlement apply’. 17 In other
words, minimum entitlements continue to arise under the NES, despite the
fact that they may be expressed in a modern award or enterprise agreement.
By way of example, a legislative note to section 55(6) states that ‘if the
award or agreement entitlement is to 6 weeks of paid annual leave per year,
the provisions of the [NES] relating to the accrual and taking of paid annual
leave will apply, as a minimum standard, to 4 weeks of that leave’.
15
Fair Work Act, subsection 55(1).
16
Fair Work Act, subsection 55(4)(b).
17
Fair Work Act, subsection 55(6)(b).
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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Accordingly, even where an enterprise agreement or a modern award
provides for annual leave entitlements which supplement the NES, part of
those entitlements will still relevantly arise under the NES (for the purposes
of section 130 of the Fair Work Act) and will therefore be prevented from
accruing during compensated absences.
However, the portion of the
entitlement which is superior to the NES will arise under the enterprise
agreement or modern award, thereby avoiding the terms of section 130,
meaning that it will still accrue while an employee is receiving workers’
compensation.
To continue the legislative example quoted above, this would mean that
where an enterprise agreement provides for six weeks annual leave, any
entitlement in excess of four weeks would accrue on a compensated
absence. Yet because the initial four weeks are parallel entitlements arising
under the NES, they will not accrue, as they are caught by section 130. In
practical terms, this will mean that employers’ liabilities will not be activated
until a sufficient period of time has elapsed, such that an employee, had they
been at work, would have been entitled to more than four weeks leave.
A modern award could also supplement the NES annual leave provisions by
providing for loaded rates of pay to employees on leave, rather than the
base rates of pay mandated under the NES.18 However, Master Builders
considers that supplemented rates of pay will only give rise to an
enforceable entitlement if the modern award or enterprise agreement also
provides for more than four weeks leave. Otherwise, no actual leave to
which the supplemented payment relates would ever accrue, such that the
notional entitlement could not be triggered.
18
Fair Work Act, subsection 90(1).
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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6
CONCLUSION
Master Builders considers that the manner in which section 130 interacts
with State and Territory workers compensation laws and with modern
awards/enterprise agreements is overly complex. A flow diagram of Master
Builders’ understanding of the interaction between the Fair Work Act, State
and Territory laws and modern awards/enterprise agreements is set out at
Attachment B to this memorandum.
Master Builders considers that the uncertainty surrounding the application of
section 130 itself constitutes strong grounds for legislative change. It is
Master Builders’ policy that employees on compensated absences should
not be able to accrue leave entitlements. Such duplication of entitlements is
in excess of a fair and relevant safety net.
Master Builders considers that section 130 of the Fair Work Act should be
redrafted, to provide that employees on compensated absences will not
accrue leave entitlements, whether arising under the NES, a modern award
or an enterprise agreement, unless a modern award or enterprise agreement
specifically states that such accrual may occur.
Master Builders also
advocates harmonisation, so that only the Fair Work Act (rather than State
and Territory laws) would apply. The current state of the law, which
references complex State and Territory arrangements and allows minimum
entitlements to be excluded by section 130, but supplementary conditions to
accrue, is absurd.
******
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
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Attachment A – table of interaction between leave and workers’ compensation under
State and Territory law
State or
Territory
Relevant
legislation
Relevant
provisions
Does leave accrue?
ACT
Workers
Compensation
Act 1951
Section 46
Yes (for any kind of leave,
though query whether long
service leave is able to
accrue)
Yes (for any kind of leave,
though query for long service
leave)
NSW
Workers
Compensation
Act 1987
Sections
49, 50
Yes (annual, public holidays
long service and personal
leave)
Yes (annual, public holidays
long service and personal
leave)
But:
But:
-
-
Some uncertainty.
-
No payment needs to be
made for personal leave
taken, though accrued
leave not diminished.
NT
Qld
Workers
Rehabilitation
and
Compensation
Act
Workers’
Compensation
and
Rehabilitation
Act 2003
NA
Section
119A
Some uncertainty.
Can leave be taken?
No (annual, section 130 of
the Fair Work Act applies)
No (section 130 of the Fair
Work Act applies)
But:
But:
-
Entitlements under
modern awards and
enterprise agreements
which are better than
those provided under the
NES still apply.
-
Entitlements under
modern awards and
enterprise which are
better than those
provided under the NES
still apply.
-
Enterprise agreements
can specifically provide
for accrual on
compensated absences.
-
Enterprise agreements
can specifically provide
for leave-taking on
compensated absences.
Yes (for personal, annual
and long service leave)
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
Yes (for personal, annual
and long service leave)
SA
Tas
Workers’
Rehabilitation
and
Compensation
Act 1986
Section 40
Workers’
Sections 84,
Rehabilitation
84B
and
Compensation
Act 1988
Yes (for
11annual and personal
leave)
But:
- Restrictions apply for
those with total incapacity
for 52 weeks.
-
Uncertainty as to whether
actual leave can be taken
or only payment in lieu.
-
Enterprise agreements
can exclude restrictions.
Yes (for annual and long
service leave)
But:
- Re-crediting and timing
restrictions apply.
-
Vic
WA
Accident
Compensation
Act 1985
Workers’
Compensation
and Injury
Management
Act 1981
NA
Section 81
Enterprise agreements
can exclude such
restrictions.
Yes (for annual, personal
and long service leave)
Yes (for annual and long
service leave)
But:
- No compensation payable
for periods where leave
taken.
-
Enterprise agreements
can exclude such
restrictions
No (section 130 of the Fair
Work Act applies)
But:
- Entitlements under
modern awards and
enterprise agreements
which are better than
those provided under the
NES still apply.
No (section 130 of the Fair
Work Act applies)
But:
- Entitlements under
modern awards and
enterprise agreements
which are better than
those provided under the
NES still apply.
-
-
Enterprise agreements
can specifically provide
for accrual on
compensated absences.
Enterprise agreements
can specifically provide for
leave-taking on
compensated absences.
No (section 130 of the Fair
Work Act applies)
But:
- Entitlements under
modern awards and
enterprise agreements
which are better than
those provided under the
NES still apply.
No (section 130 of the Fair
Work Act applies)
But:
- Entitlements under
modern awards and
enterprise agreements
which are better than
those provided under the
NES still apply.
-
-
`
Enterprise agreements
can specifically provide
for accrual on
compensated absences.
Submission to DEEWR & FWO - workers’ compensation and leave entitlements
Enterprise agreements
can specifically provide for
leave-taking on
compensated absences.
Attachment B - flow chart of interaction between
12 federal, State and Territory laws and modern
awards/enterprise agreements
General federal prohibition
against ‘double-dipping’
Preservation of leave
Section 130(1) of the Fair Work Act excludes leave
entitlements under the NES for employees on a
compensated absence
Section 130(2) preserves State and Territory laws
providing leave to employees on compensated
absences
under State and
No restrictions on
leave in ACT & Qld,
leave accrues as if
employee at work
Territory laws
States and Territories which
do not provide leave:
NT, Vic & WA
Modern awards and
enterprise
agreements may
specifically provide
for leave to
employees on
compensated
absences, as can a
common law contract
States and Territories which
provide leave:
ACT, NSW, Qld, SA & Tas
Some restrictions
on leave in NSW, SA
& Tas
Modern awards and
enterprise
agreements may still
specifically provide
for unrestricted leave
to employees on
compensated
absences, as can a
common law contract
Where modern
award or enterprise
agreement silent on
leave for employees
on compensated
absences, any accrual
entitlements in
addition to NES must
be provided
Interaction with modern awards
E.g. Enterprise
agreement contains
annual leave regime
which defines
‘service’ for the
purposes of accrual
to include periods of
compensated
absences
and enterprise agreements
E.g. Enterprise
agreements providing 6
weeks leave: 2 weeks
leave will accrue
Submission to DEEWR & FWO - workers’ compensation and leave entitlements