Coal Mining Industry (Long Service Leave) Legislation Amendment Act 2011

Several defined terms are central to understanding the Act. Eligible employee is not redefined directly by this Act but is a term used throughout; the Act inserts definitions that borrow heavily from the Fair Work Act 2009. Qualifying service is defined in new s 39A(2) as a period during which an employee is an eligible employee of one or more employers. It excludes unauthorised absence, most unpaid leave (except community service leave, stand-down, workers’ compensation leave, and prescribed leave). Crucially, if an employee ceases to be an eligible employee for a continuous period of 8 years or more (a break period), any earlier service is not counted (s 39A(2)(c)), although if the employee already had an entitlement at the time of cessation, that entitlement is preserved (s 39A(4)). Casual employees are deemed to be eligible employees for the whole week if they are eligible at any time during that week (s 39A(3)). Base rate of pay adopts the Fair Work Act definition (item 1). LSL credit is defined in s 39AB(5) as the total hours of entitlement accrued minus leave already granted. Eligible wages is defined in the Payroll Levy Collection Act as amended (new s 3B) and varies by employee type: for non-casual employees it is the greater of base rate (including incentive payments and bonuses) or 75% of base rate plus overtime, penalty rates, and allowances (excluding reimbursements); for salaried employees it is annual salary including incentives but excluding overtime, penalty rates, and shift loadings; for casuals it is base rate including incentives. All calculations are made before any salary sacrifice deductions (s 3B(4)). The Act introduces civil penalty provisions (new s 4(1) definition) which are declared as such in the Act (e.g., s 39AC(2), s 39AD(2), s 39C(3)). A civil penalty order is defined in new s 49A. Waiver agreements (s 39B) allow an employee of a prescribed kind to agree with an employer to receive additional pay or superannuation in lieu of long service leave. Such agreements must be in writing, lodged with the Corporation, Board-approved, and must provide value at least equal to the payroll levy that would otherwise be payable (s 39B(2)). The Employer Reimbursement Rules (new s 45) are a legislative instrument made by the Board that determines how employers are reimbursed from the Fund for payments made under Part 5A. The Corporation’s functions are expanded to include maintaining records of employment, qualifying service, leave entitlements, employers, and amounts payable under Part 7 (new para 7(da)). The Fund itself may have separate notional accounts for pre-2012 and post-2012 levy payments (new s 40(4)).

The Act directly affects employers of eligible employees in the black coal mining industry. These employers are required to comply with the new statutory leave entitlement, pay long service leave in accordance with the Act, make returns and pay levy under the Payroll Levy Collection Act, and engage auditors to report on levy compliance. Employers may also be reimbursed from the Fund for payments made under Part 5A (new s 44). The Corporation (the statutory body administering the scheme) is significantly affected: it must maintain expanded records, calculate entitlements for transitional periods, approve waiver agreements, enforce civil penalty provisions, and seek actuarial advice every three years (new s 43). The Board of the Corporation is affected by changes to its composition: from 1 January 2012, one director represents New South Wales/Tasmania companies, one represents Queensland companies, two represent the Mining and Energy Division of the CFMEU, and one represents a group of five other unions (Schedule 2, items 3-5). Executive officers of bodies corporate are personally exposed to civil penalties if they knew a contravention would occur, were in a position to influence conduct, and failed to take all reasonable steps to prevent it (new s 49CE). Employees and former employees are affected by the new entitlement: they acquire statutory rights to long service leave after 8 years of qualifying service, can apply for leave in single continuous periods of at least 14 days, and can request payment on cessation (including for ill health, retirement after 60, redundancy, or death). Employee organisations and industrial associations can apply to court for remedies in relation to contraventions (s 39DA). Auditors are affected by new obligations to prepare and give reports to the Corporation under ss 10 and 10A of the Payroll Levy Collection Act, with strict liability offences for non-compliance. The Fair Work Australia (FWA, now Fair Work Commission) is given jurisdiction to deal with disputes about long service leave under Part 5A, despite the general limitation in s 595(1) of the Fair Work Act (s 39D). Finally, the Administrative Appeals Tribunal may review certain Board decisions, including refusal to approve a waiver agreement or variation (s 52B).

The central right created by the Act is the entitlement of an eligible employee to long service leave after completing 8 years of qualifying service (s 39A(1)). The amount of leave is calculated using the formula in s 39AA: 35 hours for a full-time employee per week of qualifying service, a proportional amount for part-time employees (lesser of ordinary hours or 35), and hours worked for casuals (capped at 35). Employees may apply in writing for a single continuous period of at least 14 days, not exceeding their LSL credit (s 39AB(1)-(2)). The employer must respond in writing within 14 days, stating whether leave is granted and, if refused, the reasons. Refusal may only be on reasonable business grounds (s 39AB(3)-(4)). Payment for long service leave must be at least equal to the base rate of pay (including incentive payments and bonuses paid at least monthly) that would have been payable had the employee not taken leave, calculated before salary sacrifice deductions (s 39AC). Payment must be made at the same time as normal wages, unless an industrial instrument allows advance payment and the employee requests it (s 39AD). Public holidays and community service leave periods do not count as long service leave but do not break continuity (s 39AE). On cessation of employment (other than by death), an employee with untaken leave may request a payment from the employer within 30 days (s 39C). If the employee ceases due to ill health or retirement after 60, even without 8 years of service, a pro-rata payment is available (s 39CA). Similarly, redundancy after at least 6 years of qualifying service triggers a pro-rata payment (s 39CB). On death, the legal personal representative may claim payment for untaken leave or pro-rata service (s 39CC). Waiver agreements allow prescribed employees to trade long service leave for additional remuneration or superannuation. The employer must ensure compliance with the agreement (s 39BE). The Corporation has the right to require information or documents from any person if it believes on reasonable grounds that the person has information relating to employment, employers, or the Corporation’s functions (s 52A). The Corporation may apply to court for civil penalty orders within 6 years of an alleged contravention (s 49A). The Board has the duty to seek actuarial advice at least every three years on levy adequacy (s 43). The Board must make Employer Reimbursement Rules by legislative instrument (s 45). The Corporation must reimburse employers for payments under Part 5A in accordance with those rules (s 44). Employers must make monthly returns within 28 days of month end (Payroll Levy Collection Act s 5, as substituted). They must also give auditor reports within 6 months after the financial year end (s 10). The Board can require an auditor to give a report (s 10A). Auditors are entitled to fees from the employer, and if the report shows full compliance, the employer may claim reimbursement from the Fund (s 10B).

The Act introduces a comprehensive civil penalty regime in new Part 7A. Civil penalty provisions are those declared as such in the Act. Key examples include: an employer’s failure to respond to a leave application within 14 days or refusal on unreasonable grounds (s 39AB(6)), failure to pay minimum leave amount (s 39AC(2)), failure to pay in the correct manner (s 39AD(2)), failure to comply with a waiver agreement (s 39BE(2)), failure to make cessation payments (ss 39C(3), 39CA(3), 39CB(3), 39CC(3)), and failure to comply with a Corporation notice to produce information (s 52A(7)). Under the Payroll Levy Collection Act, failure to make a return (s 5(4)) and failure to give an auditor report (s 10(3)) are also civil penalty provisions. Maximum penalties for contraventions of civil penalty provisions under the Administration Act are 300 penalty units for a body corporate and 60 penalty units for any other person per contravention (s 49A(5)). For provisions under the Payroll Levy Collection Act, the maxima are 200 and 40 penalty units respectively (s 49A(6)). Multiple contraventions may be dealt with in a single order but the total penalty cannot exceed the sum of individual maxima (s 49AC). Continuing contraventions of a provision requiring an act to be done result in a separate contravention for each day the failure continues (s 49CA). The Corporation must apply for a civil penalty order within 6 years of the alleged contravention (s 49A(2)). The court applies civil evidence and procedure rules (s 49AE). A contravention is not an offence (s 49AF). Criminal proceedings are not barred by a civil penalty order, but if criminal proceedings are commenced first, civil proceedings are stayed (s 49BA). If a person has been convicted of an offence based on substantially the same conduct, a civil penalty order cannot be made (s 49B). Evidence given in civil penalty proceedings is not admissible in criminal proceedings for the same conduct, except for perjury (s 49BC). Ancillary contravention is covered: attempting, aiding, inducing, being knowingly concerned, or conspiring is treated as a contravention (s 49C). Mistake of fact is a defence if the person had a reasonable but mistaken belief about facts that, had they existed, would mean no contravention (s 49CB). State of mind does not need to be proved for most civil penalty provisions, except for section 49C(1) (ancillary involvement) (s 49CC). Executive officers of a body corporate commit a separate civil penalty if they knew a contravention would occur, were in a position to influence conduct, and failed to take all reasonable steps (s 49CE). In assessing reasonable steps, the court considers what action the officer took to ensure employee knowledge and what action was taken upon becoming aware of the contravention (s 49CF). Acts or omissions of employees, agents, or officers within actual or apparent scope are attributed to the body corporate (s 49CD). In addition to civil penalties, strict liability offences exist: failure to comply with a Corporation notice to produce (penalty 30 penalty units, s 52A(6)), failure to make a return (30 penalty units, Payroll Levy Collection Act s 5(3)), failure to give an auditor report (30 penalty units, s 10(2)), and failure by an auditor to comply with a Board notice (30 penalty units, s 10A(4)). Existing offences in the Levy Collection Act for false statements and obstruction carry increased penalties: up to 100 penalty units or 2 years imprisonment (s 14(3), as amended). The regulations can prescribe penalties up to 50 penalty units for record-keeping offences (new s 54(2)). Courts may also award compensation, grant injunctions, or make other orders to stop or rectify contraventions (s 39DB).

The Act expressly overrides other long service leave entitlements for eligible employees. Section 39E provides that Part 5A applies to the exclusion of Division 9 of Part 2-2 of the Fair Work Act 2009 (the National Employment Standards (NES) provision for long service leave). This means that for employees in the black coal mining industry, the industry-specific scheme replaces the NES long service leave standard. Section 39EA similarly excludes state and territory laws that deal with long service leave. However, section 39EB clarifies that Part 5A establishes minimum entitlements and rights and is not intended to override entitlements or rights under an industrial instrument that covers the employee. Therefore, a modern award, enterprise agreement, or workplace determination may provide more generous long service leave provisions, but cannot provide less. The Act incorporates many definitions from the Fair Work Act 2009, including base rate of pay, covers, employee organisation, enterprise agreement, fair work instrument, FWA, industrial association, modern award, public holiday, and workplace determination (items 1, 4, 6, 7, 9, 11, 12, 17, 19, 23). The meaning of eligible wages in the Payroll Levy Collection Act also references base rate of pay and uses the Fair Work Act definitions. The Act confers jurisdiction on the Federal Court and Federal Magistrates Court (now Federal Circuit Court) for civil matters arising under the Act or the Payroll Levy Collection Act, with the Fair Work Division exercising that jurisdiction (s 52C). The Act also preserves the role of FWA (now Fair Work Commission) in dealing with disputes about Part 5A, treating such disputes as if they were disputes in relation to the NES (s 39D). The transitional provisions deal with the interaction between the new Part 5A and the previous regime: service between 1 January 2000 and 31 December 2011 is to be calculated as qualifying service under the new law (Schedule 5, items 2-3). Award employees’ pre-2000 entitlements under applicable award-derived long service leave terms (preserved by section 113 of the Fair Work Act) are unaffected (Schedule 5, item 4). The Act also repeals the Schedule to the 2009 Amendment Act (Schedule 4). Importantly, section 39F provides that all entitlements under Part 5A may be cancelled, revoked, terminated, or varied by later legislation, and no compensation is payable for such changes. This provision preserves Parliament’s capacity to amend the scheme in future.

The Coal Mining Industry (Long Service Leave) Legislation Amendment Act 2011 is itself an amending Act. It received Royal Assent on 29 November 2011. Most provisions commenced on 1 January 2012 (s 2, items 2, 5). However, Schedule 4 item 1 (amending the 2009 Amendment Act) commenced retrospectively on 1 January 2010. The Act amends three principal Acts: the Coal Mining Industry (Long Service Leave Funding) Act 1992 (renamed to the Administration Act), the Coal Mining Industry (Long Service Leave) Payroll Levy Act 1992, and the Coal Mining Industry (Long Service Leave) Payroll Levy Collection Act 1992. The amendment to the short title of the principal Act is effected by item 43 of Schedule 1, changing “Funding” to “Administration”. This is a significant legislative history point because the Act is no longer just about funding but also about administration and entitlements. The Act also amends the Coal Mining Industry (Long Service Leave Funding) Amendment Act 2009, inserting a definition of “employment as an eligible employee” and repealing its Schedule 2 (Schedule 4). This reflects a consolidation of the transitional arrangements. The amendment history is primarily contained within this single piece of legislation; subsequent amending Acts are not listed. The transitional regulations power (Schedule 5 item 11) allows the Governor-General to make regulations with retrospective effect, despite the Legislative Instruments Act 2003, to deal with matters arising out of the enactment of Part 5A.

The source text does not name any specific cases. However, the Act establishes a clear framework for litigation. The Corporation may apply to the Federal Court or Federal Magistrates Court for a civil penalty order (s 49A). Employees and employee organisations may apply for compensation, injunctions, or other orders for contraventions of civil penalty provisions in Part 5A (s 39DA-39DB). FWA may deal with disputes (LSL disputes) under the Act (s 39D). The Administrative Appeals Tribunal has jurisdiction to review Board decisions to refuse to approve a waiver agreement or variation (s 52B). The Act also provides for civil proceedings and criminal proceedings to occur sequentially or in parallel, with specific protections against double jeopardy (ss 49B-49BC). The conferral of jurisdiction on the Federal Court and Federal Magistrates Court in the Fair Work Division (s 52C) indicates that litigation under this Act will likely be conducted in those courts. No prior case law is cited in the Act itself; the litigation history will develop post-commencement.

Several less obvious provisions could trip up practitioners. First, the definition of qualifying service excludes periods of unpaid leave except for certain specified categories (s 39A(2)(b)). If an employee takes unpaid parental leave that is not community service leave or stand-down, it will not count as qualifying service, potentially delaying the 8-year threshold. Second, a break period of 8 years or more wipes out prior service (s 39A(2)(c)), but only if the employee did not have an entitlement at the time of cessation (s 39A(4)). This means an employee who accrued an entitlement but then left the industry for 8 years retains that entitlement if they return. Third, the waiver agreement provisions are tightly constrained: only employees of a kind prescribed by regulation can enter them (s 39B(1)), and the value of additional remuneration or superannuation must at least equal the payroll levy that would have been payable (s 39B(2)). The agreement ceases to have effect if the Board refuses approval (s 39BC(5)), and the Board has only 30 days to decide, with a deemed approval if it does nothing (s 39BC(2)). Fourth, the payment on cessation provisions are not automatic; the employee or legal personal representative must request payment in writing (ss 39C, 39CA, 39CB, 39CC). The employer has 30 days from the request to pay. If the employee fails to make a request, the entitlement may be lost, except in the case of death where the legal personal representative can request. Fifth, the employer’s obligation to pay for long service leave is calculated by reference to the base rate of pay before salary sacrifice, but only includes incentive-based payments and bonuses paid at least monthly (s 39AC(3)). Annual bonuses or quarterly incentives may not be included. Sixth, the eligible wages definition for levy purposes is not simply total remuneration; for non-casual employees it is the greater of base rate (including incentives) or 75% of base rate plus overtime, penalties, and allowances. This might result in a higher levy base than expected, especially where overtime is significant. Seventh, the transitional provisions require the Corporation to calculate pre-2012 service, but for former employees who are not eligible at 1 January 2012, they must provide information by 30 September 2012 (or later prescribed date) (Schedule 5 item 3(3)). If they miss that deadline, later records created after 1 January 2012 will not trigger a calculation (item 9). Eighth, award employees retain pre-2000 entitlements under preserved award-derived terms (item 4), which may be different from the Part 5A calculation. Ninth, the civil penalty provision for executive officers (s 49CE) does not require the officer to have been directly involved; it is enough that the officer knew the contravention would occur and was in a position to influence conduct. The defence of taking all reasonable steps is judged by specific factors (s 49CF). Tenth, the Fund’s reimbursement to employers is not automatic; it depends on the Employer Reimbursement Rules made by the Board (s 45), which may include notional accounts and different treatment for pre-2012 and post-2012 service.

Employers should take several steps to comply with the amended regime. First, they must ensure payroll systems can track ordinary hours of work for full-time, part-time, and casual employees separately, as the long service leave accrual formula depends on employee classification (s 39AA). For each week of qualifying service, the employer must calculate the appropriate number of hours of leave. Systems should also record any unpaid leave that does not count as qualifying service (e.g., unauthorised absence, most unpaid leave except community service leave, stand-down, workers’ compensation, and prescribed leave). Second, when an employee applies for long service leave in writing, the employer must respond in writing within 14 days, stating whether leave is granted and, if refused, giving details of the reasons (s 39AB(3)). Refusal is only allowed on reasonable business grounds (s 39AB(4)). The employer should document the grounds. Third, payment for long service leave must be at least the base rate of pay (including monthly incentive payments and bonuses) that would have been payable had the employee not taken leave, calculated before salary sacrifice deductions (s 39AC). Payment must be made at the same time as normal pay, unless the employee requests advance payment and an industrial instrument allows it (s 39AD). Fourth, on cessation of employment, if the employee has untaken leave, the employer must wait for a written request from the employee or legal personal representative (except on death) before making payment within 30 days (ss 39C-39CC). The employer should not assume automatic payment. Fifth, if a waiver agreement is in place, the employer must lodge it with the Corporation promptly, ensure the value of remuneration or superannuation equals or exceeds the payroll levy that would have been payable, and comply with the terms (ss 39B, 39BE). The employer cannot unilaterally refuse to terminate a waiver agreement unless there are reasonable grounds (s 39BB(2)). Sixth, the employer must make monthly returns under the Payroll Levy Collection Act within 28 days after each month (s 5) and pay the levy by the due date (s 4). The return must include eligible wages as defined in new s 3B. Seventh, the employer must give an auditor report to the Corporation within 6 months after the end of each financial year, stating whether all levy has been paid and if any reimbursement amounts are correct (s 10). The employer must also engage an auditor if the Board requires a report (s 10A). Eighth, the employer must maintain records relating to employment, qualifying service, long service leave entitlements, and amounts payable under Part 7 (new para 7(da) and regulation-making power). The regulations may require specific records and provide penalties of up to 50 penalty units for non-compliance (new s 54(2)). Ninth, if the Corporation issues a notice requiring information or documents, the employer must comply within at least 28 days, subject to civil penalty and strict liability offence (s 52A). Tenth, executive officers should implement compliance systems, train employees, and take prompt corrective action if a contravention is detected, to avoid personal civil penalty liability (s 49CE-49CF). The Board’s actuarial advice and Employer Reimbursement Rules should be monitored to ensure the Fund remains viable and that reimbursement claims are properly made.