The Federal Government's second round of workplace reforms will soon be law as the Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023 (Protecting Worker Entitlements Bill) passed late last week, for the most part with bipartisan support. Many of the changes introduced by this Bill will take effect once the Act receives Royal Assent, which is expected shortly.

The Protecting Worker Entitlements Bill contains reforms on varied topics including:

• enhanced protections for migrant workers;
• expansion of the circumstances in which employees can authorise employers to make valid deduction from payments;
• a new minimum superannuation contributions entitlement in the National Employment Standards; and
• stronger and more flexible access to unpaid parental leave (UPL) under the Fair Work Act 2009 (Cth) for parents and families to choose how they combine care and work responsibilities.

Here we outline what organisations need to know about the key changes, with a focus on parental leave.

Parental leave changes

To help understand the changes to UPL under the Protecting Worker Entitlements Bill, here's a quick overview of the current position in Australia: eligible employees who become parents can potentially access three different parental leave related entitlements:

• UPL as part of the National Employment Standards (NES) under the Fair Work Act;
• parental leave pay under the Paid Parental Leave Act 2010 (PPL Act) – a Federal Government funded scheme for eligible employees and other eligible workers; and
• in some cases, under an industrial instrument (e.g. an enterprise agreement) or an employment contract or policy (e.g. more generous employer funded PPL) or both.

The interaction between these entitlements can be challenging to navigate. To add to the complexity, there are various types of parental leave and associated concepts (such as flexible and continuous parental leave, keeping in touch days and others).

Broadly, the NES entitles eligible employees to take up to 12 months of UPL, which must generally be taken as a single continuous period (continuous UPL). The existing provisions allow employees to access up to 30 days of their entitlement as flexible UPL days. Flexible UPL days are an exception to the requirement that UPL must be taken in a single continuous period. Currently, once an employee takes a day of flexible UPL, the employee forfeits any remaining continuous UPL.

Unpaid parental leave changes

Broadly, the Protecting Workers Entitlements Bill will amend the Fair Work Act to among other things:

Increase the entitlement to flexible UPL from 30 days to 100 days (or a higher number prescribed by regulation) – to align with recent changes to the Federal Government funded PPL scheme (summarised below), so employees can access the Government's PPL at the same time;

Remove some of the restrictions around taking UPL so that parents can take it in a way that works better for them – as part of this, the changes will allow:

• employees to take flexible UPL before or after a period of continuous UPL;
• both employees to start and end their continuous UPL on any day within 24 months of the birth or placement of the child;
• pregnant employees may take flexible UPL in the six weeks before the expected date of birth of the child;

Remove limits on employee couples taking concurrent UPL – currently capped at 8 weeks;

Allow members of employee couples to take 12 months of UPL, and then request up to a 12 month extension of UPL, regardless of how much UPL the other member of the employee couple has taken or requested. Our earlier update on flexible work arrangement reforms describes what employers need to know when responding to such requests.

The changes take effect on 1 July 2023 (or when the Act receives Royal Assent if that is later).

Recent paid parental leave changes

The changes under the Protecting Worker Entitlements Bill are designed in part to align with other recent changes to Australia's PPL scheme – the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Act 2023 changes started in March 2023 and among other things:

• create a single parental leave payment of 20 weeks (or 100 days) for eligible claimants – two of these weeks are reserved on a ‘use it or lose it’ basis for each claimant in a couple to encourage each parent to take some leave to care for their child;
• allow eligible claimants to take the payment flexibly within two years of the birth or adoption;
• introduce a $350,000 family income limit (indexed from 1 July 2024) to access the Government's PPL if a claimant does not meet the individual income test; and
• expand eligibility to allow an eligible father or partner to receive parental leave pay even if the birth parent does not meet income and residency requirements.

These reforms do away with, for example, the former PPL entitlement of 18 weeks for the primary care giver and former two week 'Dad and Partner Pay'.

The Minister for Social Services, Amanda Rishworth, has announced that the Government will progressively increase the PPL entitlement to 26 weeks in 2026 – as part of a further round of reform.

For children born or placed after 1 July 2023, if an employee is receiving PPL under the Government scheme, any 'keeping in touch day' must be paid by the employer (that is, the Government will no longer pay for an employee to work when they are on Government PPL). This change may create some administrative challenges and confusion.

Other changes introduced by the Protecting Worker Entitlements Bill

Migrant workers

Introducing protections to ensure that migrant workers (including temporary migrant workers working in Australia) would be entitled to the benefit of the Fair Work Act regardless of their immigration status.

Authorised deductions

Expanding the circumstances in which employees can authorise employers to make valid deduction from payments – i.e., permitting regular deductions for amounts that vary from time to time subject to certain conditions (as an example, this may be used to authorise union fees which change from time to time). These changes take effect 6 months after Royal Assent.

Superannuation

Introducing a new minimum entitlement to superannuation contributions in the National Employment Standards (NES). This change is designed to allow a broader range of employees (or an employee organisation or the Fair Work Ombudsman on their behalf) to recover unpaid superannuation. The change is intended to complement, but not replace, the ATO’s powers to recover superannuation guarantee charge amounts where an employer has a superannuation guarantee shortfall. The Opposition's proposed amendments to the Bill to address employer concerns about possible competing enforcement activity from different regulators given the Bill's drafting were defeated.

What you need to do next

As a result of these reforms:

• employers should review existing policies and practices related to authorised deductions and parental leave – both paid and unpaid. Managers and payroll teams will need to ensure they understand the changes and have appropriate supports in place to ensure compliance.
  
  As part of parental leave policy reviews, some organisations are moving away from concepts (such as the notion of a primary care giver in the context of paid leave) in their own more generous employer funded PPL policies to reflect the statutory changes. While this may not be strictly be required in all cases, these reforms provide an opportunity to bring existing policies into line with the new statutory approach. Of course, the costs associated with doing so (e.g. by potentially extending generous employer funded PPL beyond primary care givers) will need to be factored into any policy review.

• organisations with migrant workers should understand the implications. Our dedicated Migration Law team can help – it offers full-service Migration law advice, including dealing with compliance issues raised by these reforms.
• Finally, a potentially broader range of employees (or a union or the Fair Work Ombudsman on their behalf) will now be able to recover unpaid superannuation under the Fair Work Act.

There is no doubt these changes are positive for employees – but they add another layer to Australia's already complex statutory and award based system of employee entitlements and to the challenge for employers of balancing employee flexibility against operational requirements.

If you have any questions or would like support dealing with these changes, please contact one of the team.