(First published in Workforce 24/01/2014, written by David Marin-Guzman)
The Federal Government has denied reports it is seeking to displace employer’s existing paid parental leave (PPL) schemes following claims it is looking at using a new constitutional power to implement the national scheme. University of Sydney Professor Marian Baird, who is one of the 30 academics on the Work and Family Policy Roundtable, told Workforce the govt had been consulting stakeholders and experts on its new scheme with a particular focus on a proposal to use the Constitution’s social services powers to displace employer’s existing PPL schemes and so prevent “double dipping”. Section 51(xiiiA) of the Constitution allows parliament to make laws to provide social services including maternity allowances. Workforce understands it would allow the govt to “take on” the employer’s responsibility to provide payment for the PPL. However, it is unclear if that would necessarily displace employees’ right to access their existing schemes. Baird speculated the govt could also use the constitutional power under s51(xxxi), which allows for acquisition of property on just terms from any state or person. Workforce understands “property” can include contractual rights and “just terms” does not have to be equal terms.
Govt says employees will not lose conditions
However, a spokesperson for the Minister for Social Services Kevin Andrews appeared to back away from the proposal to override existing schemes. A carefully worded statement issued on Wednesday (January 23) said the govt “does not intend to displace existing PPL schemes provided under industrial agreements”.
Instead, it would “take on an employer’s responsibility to provide the payment and superannuation up to the PPL wage amount”. “Employee entitlements set out in existing enterprise agreements will not be affected – employees will not lose any conditions they already have,” the statement said. Employers would still be allowed to determine their own policies, including by offering “top-ups” to the leave scheme. The govt said because its scheme will relieve employers of the costs of PPL, it would allow them to invest in other work/family policies such as child care or flexible work arrangements. Before the election, the Coalition promised that employees would be able to choose between their schemes.
COAG in-principle agreement
In late August 2013, a govt costings paper said state public sector employees would have a choice between staying with their own scheme and adopting the Commonwealth scheme. A Coalition campaign spokesperson also told Workforce that private sector employers would be able to choose between schemes (WF18825). State govts appear to have reached an in-principle agreement on the PPL scheme. A December 13 Council of Australian Governments (COAG) communiqué revealed they had agreed state public sector employees will be covered by the new federal scheme. They pledged that officials would “work together closely on implementation arrangements and funding for the proposed Commonwealth national scheme”. “The Commonwealth’s intention is that states will not be financially disadvantaged and the scheme will be administratively simple,” it said.
How to calculate a replacement wage
One issue being raised by business in consultations is determining what the wage rate will be for the person on leave. Under the govt’s scheme all eligible women will receive the same minimum payment during leave – that is, their actual wage, or, if higher, the national minimum wage, for 26 weeks. Employers have usually calculated replacement wages but those calculations can be subject to disputes. This time the govt would have to determine each case and Workforce understands it is looking to set a “base wage” for each person. However, that could be complicated by employees who are paid through commissions, bonuses or performance reward systems. Self-employed workers face their own issues. Andrews’ spokesperson said consultation was still continuing, including with business groups, superannuation and women’s organisations, not-for-profit representatives, rural groups and state and territory govts. The govt plans to introduce legislation for the scheme this year and it is expected to start on July 1, 2015.
Social service power a ‘backdoor’ to collective bargaining?
Analysis: If the govt’s proposal to use the social services power was enacted, Workforce understands it would be the first time the power has been used in the industrial relations field. Aside from the traditional arbitration power, federal govts have previously sought to regulate IR in the private sector using the Constitution’s taxation power (superannuation), corporations power (expanding the federal IR system under WorkChoices) and external affairs powers (employment anti-discrimination statutes). The current Labor PPL scheme is implemented using the external affairs power. Liberal governments have traditionally been wary of using that power because it requires agreeing to international conventions. But using the social services power instead could have implications for other aspects of IR. The power would appear to define the PPL scheme as a welfare payment not a workplace entitlement. That could affect whether the period of PPL is counted towards an employee’s “continuous service” and so allow the employee to accrue other leave entitlements during that time, such as long service leave. It may also affect whether such PPL is considered a workplace right for general protections purposes. “It’s an untested area as far as I know,” Baird said. “Potentially it could set a precedent that I imagine people will be concerned about.” “Does it mean for example you can override other parts of enterprise agreements?” “What does it mean if govt can step in and override what employer and employees have negotiated? What does that mean about the essence of the collective bargaining relationship which is a relationship between those two parties?” Baird said the roundtable wanted to find a good way to enact the policy but cautioned it did not want to see it as a “backdoor to collective bargaining”.
(First published in Workforce 24/01/2014)
Workforce is Australia’s longest-running weekly and daily industrial relations news & analysis service. Going strong since 1974, this independent news service delivers detailed news updates to IR and HR professionals nationally – straight into their inbox.
For a FREE TRIAL, click here.
For multi-user prices, click here.