Fair Work Act 2009

s.160 - Variation of modern award to remove ambiguity or uncertainty or correct error

Variation on the Commission's own motion - Modern award superannuation clause review

Variation of modern awards - on the Commission's initiative - review and variation of modern award superannuation clauses to reflect current superannuation requirements - Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 - Superannuation in the National Employment Standards.

• [1] On 28 September 2022, the former President issued a Statement[1] (September Statement) proposing that a review be conducted of superannuation clauses in all modern awards so that they better reflect current superannuation law requirements and ensure employers and employees are not misled by the terms of award superannuation clauses. Paragraphs [2] to [7] of the September Statement set out the relevant background to those changes which is not necessary to repeat here. Three background documents[2] were also published in conjunction with the September Statement to promote the discussion of issues relevant to the review.

[2] As set out in the September Statement, it was envisaged that a Full Bench of the Commission would conduct the review in two stages. In Stage 1 of the review, the Full Bench would consider the nature and scope of the review that is required and would review the superannuation clauses in a small initial group of modern awards. Stage 2 would then review the remaining modern awards. The matter was listed for conference on 7 October 2022 to provide interested parties with an opportunity to comment on the proposed two-stage approach.

• [3] On 10 October 2022, the Commission issued a further Statement[3] (October Statement) confirming '[t]he proposed review will be confined to reviewing and varying award superannuation clauses so far as necessary to accommodate the recent changes to superannuation laws, and the stapled fund and underperforming fund arrangements in particular.'[4] The October Statement envisaged that the necessary variations would not be extensive and could be made under s 160 of the Fair Work Act 2009 (Cth) (FW Act) so as to 'remove an ambiguity or uncertainty or to correct an error'.

[4] The parties were allowed a further period of time to hold discussions and identify areas of agreement between them.

[5] Further conferences were held on 14 November and 15 December 2022.

[6] The Commission issued directions on 17 February 2023, seeking advice as to whether agreement had been reached between the peak councils as to the proposed variation and stating that, if no agreement had been reached, further directions would be issued for final determination of the matter.

[7] On 16 March 2023, the Australian Industry Group (Ai Group) and the Australian Chamber of Commerce and Industry (ACCI) wrote to the Commission advising that they and the Australian Council of Trade Unions (ACTU) had been unable to reach agreement about a proposed variation. They requested nonetheless that the Commission not proceed to finally determine the matter at this stage in light of the Government's announced intention to introduce legislation that would amend the National Employment Standards (NES) in the FW Act to include a right to superannuation. The peak councils submitted that the Commission should adjourn the current proceedings until the proposed amendments were known.

[8] The peak councils also noted that the Government had proposed reforming the 4 yearly review of superannuation default fund provisions in modern awards which may also have some bearing on the review of superannuation terms.

• [9] The ACTU expressed support for the course outlined in the correspondence from the Ai Group and ACCI.[5]

[10] On 30 June 2023, the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth) (Protecting Worker Entitlements Act) received royal assent. Schedule 3 to the Protecting Worker Entitlements Act amends the FW Act by inserting a new entitlement to superannuation contributions in the NES.

• [11] The key changes to the FW Act in relation to superannuation are in two parts and can be summarised as follows:[6]

• Part 1 of Schedule 3 to the Protecting Worker Entitlements Act inserts a new Division 10A in Part 2-2 of the FW Act to provide a new entitlement to superannuation contributions in the NES. These provisions will introduce a requirement for employers to make contributions to a superannuation fund for the benefit of an employee so as to avoid liability to pay the superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 (Cth) in relation to the employee. These changes will come into effect on 1 January 2024.

• An employer that contravenes the requirement to make superannuation contributions may be subject to a civil penalty, as is the current position for all contraventions of the NES. It would also be open to a court to make other orders, including for compensation, if these provisions are contravened.

• Part 2 of Schedule 3 makes a consequential amendment to s 149B of the FW Act to ensure alignment between new Division 10A of Part 2-2 of the FW Act and the terms relating to superannuation in modern awards. This change came into effect on 1 July 2023.

[12] The new Division 10A of Part 2-2 of the FW Act is set out at Attachment A to this statement.

[13] As the Protecting Worker Entitlements Act has received royal assent and the amendments to the FW Act in relation to superannuation are now known, I intend to call this matter back on for mention on Thursday, 13 July 2023. A notice of listing will be issued shortly.

Division 10A** - Superannuation contributions**

116A Division does not apply to certain employees or employers in referring States**

(a) an employee who is a national system employee only because of section 30C or 30M (which extend the meaning of national system employee); or

(b) an employer that is a national system employer only because of section 30D or 30N (which extend the meaning of national system employer).

116B Employer's obligation to make superannuation contributions

An employer must make contributions to a superannuation fund for the benefit of an employee so as to avoid liability to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the employee.

116C Reduction of employer's liability to the extent of superannuation charge payments**

The obligation to make contributions for an employee under section 116B does not apply to an employer to the extent that:

(a) the employer has made a charge payment (within the meaning of section 63A of the Superannuation Guarantee (Administration) Act 1992) in respect of the employee under Part 8 of that Act; and

(b) the employee is a benefiting employee (within the meaning of that Part); and

(c) the Commissioner of Taxation is required to pay, or otherwise deal with, a shortfall component (within the meaning of that Part) for the benefit of the employee under that Part.

(a) an employer has contravened, or allegedly contravened, a civil remedy provision that relates to a contravention of this Division; and

(b) the contravention, or alleged contravention, relates wholly or partly to an employee; and

(c) the employee or another person referred to in an item in column 2 of the table in subsection 539(2) would be entitled to apply for an order under Division 2 of Part 4‑1 in relation to the contravention, or alleged contravention.

No application for orders in certain circumstances

(2) An application for such an order may not be made if:

(a) the Commissioner of Taxation has commenced proceedings against the employer to recover an amount of superannuation guarantee charge; and

(i) the Commissioner has obtained an order for recovery of the charge; or

(ii) if the proceedings have not been finally disposed of - the Commissioner has not discontinued the proceedings; and

(c) the employer's superannuation guarantee shortfall in respect of which the charge is imposed includes an individual superannuation guarantee shortfall for the employee.

(3) Terms (apart from employee and employer) used in this section that are defined in the Superannuation Guarantee (Administration) Act 1992 have the same meaning in this section as they have in that Act.

(1) This section applies if a court makes an order under section 545 awarding compensation to an employee for a contravention of a civil remedy provision that relates to a contravention of this Division.

(2) The court must have regard to the principle that any component of the compensation payable on account of unpaid superannuation contributions should usually be paid to a superannuation fund for the benefit of the employee.

[1] [2022] FWC 2603.

[2] Fair Work Commission, 'Background Document 1 - modern award superannuation clauses and changes to superannuation laws' (28 September 2022); 'Background Document 2 - all modern award superannuation clauses', (28 September 2022); Background Document 3 - award superannuation clauses by category', (28 September 2022).

[3] [2022] FWC 2712.

[6] Explanatory Memorandum, Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023.

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