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Fair Work Amendment (Recovering Unpaid Superannuation) Bill 2017

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2016-2017

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

Fair Work Amendment (Recovering Unpaid Superannuation) Bill 2017

 

 

 

EXPLANATORY MEMORANDUM

and

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

 

 

 

 

 

Circulated by authority of

the Member for Mayo, Ms Rebekha Sharkie MP



Fair Work Amendment (Recovering Unpaid Superannuation) Bill 2017

 

 

OUTLINE

 

Due to constitutional limitations, the superannuation guarantee charge currently operates as a potential charge that is only owed by employers to the Australian Taxation Office (ATO) in lieu of payment of superannuation contributions to employees. The effect of this is that the only legislative avenue for employees to recover their unpaid superannuation is by entreating the ATO to recover it on their behalf.

 

The Bill seeks to strengthen the operation of Australia’s superannuation system, specifically by:

 

·          Including superannuation contributions within the National Employment Standards. This will enable the Fair Work Ombudsman to engage its authority in matters that relate to superannuation contributions, such as recovery of unpaid employer superannuation contributions; this would also provide employees with a direct legal avenue to recover unpaid superannuation [ Item 2 ]; and

 

·          Enabling employees to more effectively track if and when superannuation contributions are made to them by their employers, by requiring employers to provide notice of when contributions are made and are not made for each pay period (it is expected that most employers would provide notice via payslips) [ Item 3 ]; and

 

·          Removing the loophole which currently allows employers to potentially claim as employer contributions, employee contributions made via salary-sacrifice [ Item 5 ];

 

·          Removing the exemption that currently exists for employers that allows them to not to make superannuation contributions to employees who are paid less than $450 by way of salary or wages in a calendar month, for that month [ Item 6 ];

 

·          Removing restrictions on choice of superannuation fund, as effected via certain agreements and workplace determinations, from 1 July 2018. The practical effect of this provision is that it would no longer be possible that employees would be constrained to adopt a superannuation fund as determined by workplace-related agreements (such as awards or enterprise agreements) or workplace determinations [ Item 7 ];

 

·          Requiring the Commissioner for Taxation to conduct a review of employers’ compliance with their superannuation payment obligations as they occur under the Superannuation Guarantee (Administration) Act 1992 and other relevant laws, and include recommendations to improve compliance. The review would be conducted as soon as practicable after 12 months from the commencement of this Act, and the resulting report to be tabled in Parliament within 15 sitting days after it is given to the Minister [ Item 8 ];

 

·          Creating a duty for trustees of superannuation entities to take reasonable steps to notify their members (within 28 days and by any means) when it could reasonably have expected their member to have received a contribution from an employer, but did not. It is envisaged that the practical effect of this section is that when a member (i.e. employee) no longer receives a regular employer contribution, the superannuation entity will inform them of this fact. It is recognised that this means that such notification would also occur in the ordinary event of an employee changing their employer [ Item 9 ];

 

·          Expanding the information that superannuation providers are required to provide to the Commissioner for Taxation in their annual Member Information Statements (also known as Member Contribution Statements), such that it also includes information on:

o    each employer who has made a contribution to a superannuation plan for an individual during the (currently annual) period; and

o    the amount contributed to a superannuation plan for an individual by each employer during the (currently annual) period; and

o    if an amount is contributed to a superannuation plan for an individual by an employer during the (currently annual) period under an industrial instrument, the amount contributed under the industrial instrument; and

o    the amount of any voluntary contribution to the superannuation plan by the individual [Items 10, 11 and 12 ].

 

When combined, it is expected that these measures will enhance the ability of employees to recover unpaid superannuation from their employers, remove idiosyncratic exemptions that currently reduce the amount of superannuation contributed to employees by their employers, and allow the Federal Government to track superannuation more effectively to inform public policy and to help identify problem employers.

 

 

FINANCIAL IMPACT

 

The bill will have no financial impact.

 

 

NOTES ON CLAUSES

 

Clause 1: Short Title

Clause 1 provides for the Bill, once enacted, to be cited as the Fair Work Amendment (Recovering Unpaid Superannuation) Act 2017 .

 

Clause 2: Commencement

Clause 2 provides for the Bill to commence from 1 July 2018.

 

Clause 3: Schedules

Clause 3 provides that legislation specified in a Schedule is amended or repealed as set out in that Schedule.

 

 

 

Schedule 1 - Amendments

Items 1 through 4 apply to the Fair Work Act 2009

 

Item 1

 

Item 1 inserts relevant definitions that reproduce the effect of definitions within the Superannuation Guarantee (Administration) Act 1992 by reference to those definitions.

 

 

Item 2

 

Item 2 allows for minimum standards under the National Employment Standards to relate to superannuation contributions.

 

Note that an expected consequence of this provision is that it would provide an avenue for the Fair Work Ombudsman to engage its authority in matters that relate to superannuation, such as recovery of unpaid employer superannuation contributions. Another expected consequence is that it would provide an avenue for employees, via subsection 539(2) of the Fair Work Act 2009 , to bring proceedings for a breach of section 44(1). 

Further, it should be noted that under section 545, the Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision, as provided under Part 4-1 of the Act.

 

 

Item 3

 

Item 3 inserts a new division, Division 11A, which seeks to strengthen transparency arrangements for employees to track their paid and unpaid employer superannuation contributions.

 

Section 123A exempts defined benefit schemes from the application of Division 11A.

 

Section 123B creates an obligation for employers on behalf of their employees to contribute an amount at least equal to the superannuation guarantee amount to a complying superannuation fund or Retirement Savings Account (RSA). The contribution is to be made in relation to each pay period, and within one month after the beginning of each of those pay periods. Contributions must be made in compliance with the choice of fund requirements under the Superannuation.

 

Section 123C requires employers to provide written or electronic notice to their employees for each pay period that sets out details of the superannuation contributions made by the employer for the benefit of the employee for that period. If a superannuation payment has not been made by the employer for the benefit of the employee for that pay period, or for any earlier pay period, the notice must also include when the employer expects to make each superannuation contribution, and the total amount of the unpaid superannuation contributions.

 

If the employer makes a superannuation contribution for the benefit of an employee that relates to an earlier pay period for which the employer had not made a contribution and had provided such notice, the employer must provide notice of the contribution now made.

All notices must be provided to the employee no later than the time the employer gives the employee a pay slip relating to the pay period, and include:

·          the name of the superannuation fund to which the contribution was made; and

·          the amount of the superannuation contribution made to that fund;

·          if the contribution amount is less than the superannuation guarantee amount for that pay period, the amount of the shortfall; and

·          the date on which the superannuation contribution was made.

 

 

Item 4

 

Item 4 enacts amendments of this Act apply to pay periods beginning or after the commencement of the Act.

 

 

Items 5 through 8 apply to the S uperannuation Guarantee (Administration) Act 1992

 

Item 5

 

Item 5 clarifies that amounts contributed to a superannuation fund by an employee or RSA under a salary sacrifice arrangement are not contributions by the employer of the employee.

 

 

Item 6

 

Item 6 repeals subsection 27(2); subsection 27(2) currently states that employees who are paid less than $450 by way of salary or wages in a calendar month do not form part of the calculations by employers for individual superannuation guarantee shortfalls.

 

In practical terms, this means that employees who are paid less than $450 a month do not ordinarily receive superannuation contributions from their employer.

 

 

Item 7

 

Item 7 stops choice of superannuation fund restrictions, as effected via certain agreements and workplace determinations, from 1 July 2018. The practical effect of this provision is that it would no longer be possible that employees would be constrained to adopt a superannuation fund as determined by workplace-related agreements (such as awards or enterprise agreements) or workplace determinations.

 

 

Item 8

 

Item 8 requires the Commissioner for Taxation, as soon as practicable after 12 months from commencement of this Act, to conduct a review of employers’ compliance with their superannuation payment obligations as they occur under the Superannuation Guarantee (Administration) Act 1992 and other relevant laws. The review must also include recommendations about strategies to improve compliance.

The Commissioner must give the Minister a written report of the review, and the Minister must table the report in each House of Parliament within 15 sitting days after the report is given to the Minister.

 

 

Item 9 Applies to the Superannuation Industry (Supervision) Act 1993

 

Item 9

 

Item 9 creates a duty for trustees of superannuation entities to take reasonable steps to notify each member when the superannuation entity could reasonably have expected to have received a contribution for the benefit of that member, but did not. 

 

Notification is to occur within 28 days, and by any means of communication. It is an offence for the trustee to contravene this section (section 108B).

 

It is envisaged that the practical effect of this section is that when a member (employee) no longer receives a regular employer contribution, the superannuation entity will inform them of this fact. It is recognised that this means that such notification would occur even with a change of employer, but such an approach avoids the need for cumbersome and extensive information-sharing provisions between private employers and superannuation entities.

 

 

Item 10 through 12 apply to the Taxation Administration Act 1953

 

Item 10

 

Item 10 relates to Member Information Statements, as legislated under Schedule 1 of the Taxation Administration Act 1953 .

 

Superannuation providers are required each year by 31 October to lodge annual Member Information Statements (also known as a Member Contribution Statements) with the Commissioner for Taxation, which ordinarily includes:

·          information relating to the contributions that the superannuation providers received for each superannuation plan member, including the amount and type of the contributions; and

·          the value of any superannuation interest, or superannuation account, that the individual held in the superannuation plan at a particular time; and

·          if no contributions were made to the superannuation plan in respect of the individual during the period, a statement to that effect.

 

To enable better tracking of employer superannuation contributions, to help identify non-compliant employers, and to provide an improved information snapshot of superannuation for future public policy formation, Item 10 requires additional information to be supplied to the Commissioner; namely:

·          each employer who has made a contribution to the superannuation plan for an individual during the period; and

·          the amount contributed to the superannuation plan for the individual by each employer during the period; and

·          if an amount is contributed to the superannuation plan for the individual by an employer during the period under an industrial instrument, the amount contributed under the industrial instrument; and

·          the amount of any voluntary contribution to the superannuation plan by the individual.

 

 

Item 11

 

Item 11 is a consequential amendment relating to Item 10.

 

 

Item 12

 

Item 12 is a consequential amendment relating to Item 10.

 

 

 

 



STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Fair Work Amendment (Recovering Unpaid Superannuation) Bill 2017

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the bill

 

Due to constitutional limitations, the superannuation guarantee charge currently operates as a potential charge that is only owed by employers to the Australian Taxation Office (ATO) in lieu of payment of superannuation contributions to employees. The effect of this is that the only legislative avenue for employees to recover their unpaid superannuation is by entreating the ATO to recover it on their behalf.

 

The Bill seeks to strengthen the operation of Australia’s superannuation system, specifically by:

 

·          Including superannuation contributions within the National Employment Standards. This will enable the Fair Work Ombudsman to engage its authority in matters that relate to superannuation contributions, such as recovery of unpaid employer superannuation contributions; this would also provide employees with a direct legal avenue to recover unpaid superannuation [ Item 2 ]; and

 

·          Enabling employees to more effectively track if and when superannuation contributions are made to them by their employers, by requiring employers to provide notice of when contributions are made and are not made for each pay period (it is expected that most employers would provide notice via payslips) [ Item 3 ]; and

 

·          Removing the loophole which currently allows employers to potentially claim as employer contributions, employee contributions made via salary-sacrifice [ Item 5 ];

 

·          Removing the exemption that currently exists for employers that allows them to not to make superannuation contributions to employees who are paid less than $450 by way of salary or wages in a calendar month, for that month [ Item 6 ];

 

·          Removing restrictions on choice of superannuation fund, as effected via certain agreements and workplace determinations, from 1 July 2018. The practical effect of this provision is that it would no longer be possible that employees would be constrained to adopt a superannuation fund as determined by workplace-related agreements (such as awards or enterprise agreements) or workplace determinations [ Item 7 ];

 

·          Requiring the Commissioner for Taxation to conduct a review of employers’ compliance with their superannuation payment obligations as they occur under the Superannuation Guarantee (Administration) Act 1992 and other relevant laws, and include recommendations to improve compliance. The review would be conducted as soon as practicable after 12 months from the commencement of this Act, and the resulting report to be tabled in Parliament within 15 sitting days after it is given to the Minister [ Item 8 ];

 

·          Creating a duty for trustees of superannuation entities to take reasonable steps to notify their members (within 28 days and by any means) when it could reasonably have expected their member to have received a contribution from an employer, but did not. It is envisaged that the practical effect of this section is that when a member (i.e. employee) no longer receives a regular employer contribution, the superannuation entity will inform them of this fact. It is recognised that this means that such notification would also occur in the ordinary event of an employee changing their employer [ Item 9 ];

 

·          Expanding the information that superannuation providers are required to provide to the Commissioner for Taxation in their annual Member Information Statements (also known as Member Contribution Statements), such that it also includes information on:

o    each employer who has made a contribution to a superannuation plan for an individual during the (currently annual) period; and

o    the amount contributed to a superannuation plan for an individual by each employer during the (currently annual) period; and

o    if an amount is contributed to a superannuation plan for an individual by an employer during the (currently annual) period under an industrial instrument, the amount contributed under the industrial instrument; and

o    the amount of any voluntary contribution to the superannuation plan by the individual [Items 10, 11 and 12 ].

 

When combined, it is expected that these measures will enhance the ability of employees to recover unpaid superannuation from their employers, remove idiosyncratic exemptions that currently reduce the amount of superannuation contributed to employees by their employers, and allow the Federal Government to track superannuation more effectively to inform public policy and to help identify problem employers.

 

 

Human rights implications

 

This bill does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This bill is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

Ms Rebekha Sharkie MP