The Bill is a response to long-standing disputes regarding the eligibility of certain "periphery" workers, such as maintenance and electrical staff, whose status was recently clarified by the Federal Court. By providing a sustainable path to compliance, the Bill aims to ensure workers receive their full entitlements while protecting the financial stability of the industry fund.
The payment arrangements process established by the Bill would provide a sustainable path for employers affected by these decisions to settle arrears, some of which relate to large cohorts of employees. Employers who enter into a payment arrangement would pay levy in instalments over 6 years, with the remaining 20% of the debt waived when they reach an 80% payment threshold.[Explanatory Memo page 3]. The Bill addresses the fallout from the Hitachi and Orica Federal Court decisions, which confirmed that many workers previously thought to be outside the scheme are indeed "eligible employees." To manage the resulting liabilities, the Bill allows the Coal Mining Industry (Long Service Leave Funding) Corporation to accept voluntary payment arrangements. Crucially, it permits the Corporation to make "reasonable assumptions" to reconstruct service records where historical data is missing or incomplete [Explanatory Memo page 4]. Additionally, the Bill updates the penalty rate for late payments to 2 percentage points above the RBA cash rate target, replacing a defunct reference rate to ensure the penalty remains an effective deterrent. While an arrangement is active, employers are granted immunity from recovery proceedings and additional penalty levies for the covered debts.
The primary strength of this Bill lies in its pragmatic resolution of a complex legal and industrial legacy. For over a decade, uncertainty regarding the definition of "eligible employee" left thousands of workers on the periphery of the coal industry without access to their portable long service leave entitlements. By facilitating the onboarding of these workers and allowing for "reasonable assumptions" in record-keeping, the Bill ensures that employees receive the benefits they have rightfully earned [Judgment].
Furthermore, the Bill provides essential financial certainty for employers. The Hitachi and Orica rulings created sudden, massive liabilities for companies that had acted in good faith based on a different interpretation of the law.[1] A rigid enforcement of these arrears could threaten the solvency of smaller contractors. The six-year instalment plan and 20% waiver offer a "sustainable path" that balances the need for fund replenishment with the economic reality of the industry. This approach protects the overall viability of the Scheme by incentivising voluntary compliance over protracted and expensive litigation [Judgment].
See Hitachi Construction Machinery (Australia) Pty Ltd v Coal Mining Industry (Long Service Leave Funding) Corporation [2024] FCAFC 166.
While the Bill seeks to resolve historical disputes, it does so by creating a significant moral hazard. By waiving 20% of statutory debts, the government is effectively rewarding employers who failed to meet their levy obligations, even if those failures stemmed from legal disputes [Judgment]. This sets a concerning precedent: that if a group of employers resists compliance for long enough, the state will eventually offer a "discount" on their liabilities. This may undermine future compliance across other portable leave schemes or tax regimes.
There is also an epistemic concern regarding the use of "reasonable assumptions" to create service records. While intended to help workers with missing data, the lack of granular records means the Corporation may be crediting service—and thus paying out funds—based on potentially inaccurate estimations.[1] This risks the integrity of the Fund's assets, which are essentially the collective property of the industry's workforce. Any shortfall caused by these waivers or assumptions must be covered by the Fund's pooled investments, which could, in the long run, impact the benefits available to all members if the "relatively small number" of anticipated arrangements proves to be an underestimate [Judgment].
The Bill allows assumptions such as a casual employee working a standard 35-hour week based on annualised data, which may not reflect actual service.
2025-11-26
Passed Both Houses
Unspecified
Employment and Workplace Relations
Labour, Industrial Policy, Energy Policy