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Questioning the Fair Work Ombudsman (FWO) – Worker’s entitlements

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For over 12 months I have been trying to find solutions to an unfair industrial relations system that has caused serious issues in the mining sector in the Hunter Valley and Queensland. There is a systemic issue of ‘full-time casuals’ who are being paid 40% less than their full-time counterparts and not receiving casual loadings or entitlements.

Additionally, these casuals are hired by labour-hire firms who have classed them as ‘office workers’ rather than ‘production workers’ and when injured are not covered by injury or workers compensation. During Senate Estimates this week I questioned the Fair Work Commission on why they allowed this unfair Enterprise Agreement in the Hunter Valley:

  • FWC said that there had been no proposal to change the Black Coal Mining Award by the parties, yet we know there was in 2017 when “the Fair Work Commission rejected the application by a major employers group to extend the casual employment provisions in the Black Coal award to Production and Engineering Employees” CFMEU News 6/7/2017.
  • Commission has no governance to ensure that workers actually agree with an enterprise agreement before the Commission rubber stamps it.
  • The FWC is part of the problem not part of the solution.

Transcript

Senator ROBERTS: Thank you, Chair, and thank you all for attending. Ms Parker, could you tell me briefly your role, please. What’s the core of your role?

Ms Parker: I’m an independent statutory appointment, and I’m responsible for implementing the functions under the Fair Work Act. That includes: providing education, assistance, advice and guidance to employers, employees, outworkers, outwork industries and organisations; promoting and monitoring compliance with workplace laws; inquiring into and investigating breaches of the Fair Work Act; taking appropriate enforcement action; and performing the agency’s statutory functions efficiently, effectively, economically and ethically. The Fair Work Ombudsman—as in myself—inspectors and staff constitute a statutory office established by the Fair Work Act 2009.

Senator ROBERTS: Thank you very much. We’re very concerned about so-called casuals—I say ‘so-called’  in reference to the fact they’re not really casuals; they’re permanents. I’m referring to employees in the Hunter Valley in particular, but there are some aspects that translate into Queensland. This so-called casual coalminer issue has dragged on for years. What are you doing to fix this problem?

Ms Parker: We’re well aware of the issues, and, as you know, you and I have written to each other a couple of times. We take the matter really seriously; I can assure you of that. Where it’s about long service leave, I think we’ve mentioned before that there is a Coal Mining Industry (Long Service Leave) Funding Corporation, and we don’t have anything to do with that. Long service leave is not our purview. We do provide basic information around that, and we refer specific inquiries to that corporation if they’re about long service leave. The Fair Work Commission, who you spoke with earlier, has jurisdiction to resolve long service leave disputes under the Coal Mining Industry (Long Service Leave) Administration Act. The Fair Work Commission can assist with disputes under the act as well, when a modern award provides for a procedure to deal with disputes.

We don’t have power of that kind. We can provide general information about the long service leave scheme in the black coal industry. We’re aware of a number of class actions that are being pursued around issues in the coalmining industry. We’re obviously watching those, but they are before the court, so I won’t be able to comment on those, as you probably can understand, or about the circumstances of any individual who has sought our assistance in regard to the matter that’s before the court.

Senator ROBERTS: You did broaden it by mentioning coal LSL, so I might as well put the whole scope in there. I know you can only access or reference or work on some of those. These are in relation to miners in the Hunter Valley: loss of workers compensation; no accident pay; safety issues; nonreporting of injuries; pay rates; leave; loss of leave entitlements; long service leave, which you already mentioned—some of these are beyond your purview—security; threats; intimidation; and bullying. As I said, they’re not all your responsibility, but I’m particularly concerned about the definition of ‘casual mineworker’ and the award. As you know, your website has said and, in a letter to Simon Turner, one of your advisers said that there is no classification of ‘casual’ in the black-coalmining industry award. Specifically on pay and leave, there are no leave provisions in the enterprise agreement. These people are working full-time production roles, but casuals can’t work in production; they’re working extended rosters with no leave; and they’re being underpaid relative to their peers in full-time employment. They also have been neglected by the unions. Sorry, I’ll make that very clear and specific: the Hunter Valley division of the CFMMEU, not the whole CFMMEU. These people had no-one to turn to. They turned to you. They’ve written to you, as I said, and one lady said, ‘There is no classification of ‘casual’.’ How can they do a BOOT when there’s nothing to compare against?

Ms Parker: Senator, we’re talking about the enterprise agreement that was negotiated with the unions and employers and approved by the Fair Work Commission.

Senator ROBERTS: Yes, it was rubber stamped by the Fair Work Commission.

Ms Parker: It does include casuals, as you said, in some categories. The fact that the award doesn’t have casuals does not preclude the enterprise agreement having casuals. I think Mr Hehir said in his evidence that it is the Fair Work Commission’s role to make sure that the enterprise agreement is fair once it’s agreed.

Senator ROBERTS: How then can BHP’s Operations Services recent application for an enterprise agreement be knocked back, and yet the Chandler MacLeod 2015 enterprise agreement be passed even though the BHP OS pay rates are higher than the Chandler MacLeod pay rates?

Ms Parker: It’s a matter you’ll have to ask the commission, I’m sorry.

Senator ROBERTS: I did.

Ms Parker: They are an independent tribunal and they will have had witnesses in front of them, people providing evidence to them, before they made that decision.

Senator ROBERTS: I asked the Fair Work Commission about anybody applying to vary the black- coalmining industry award about casuals, and they said they’re not aware of any. But I notice on one of your websites and also from the CFMMEU in Queensland, that the Fair Work Commission rejected an application to vary the black-coalmining industry award 2010 to enable the engagement of casuals across all classifications of the award. That was an application from a large employer group. The CFMMEU opposed that, and it was defeated. So how would the Fair Work Commission not be aware of that?

Mr Hehir: If I recall Ms O’Neill’s evidence, it was she didn’t believe there had but that she would take it on notice and check. I think that’s where she went to.

Senator ROBERTS: It’s pretty stunning, Mr Hehir, that this issue’s been going on six years and we’ve made such a big fuss about it in the last 12 months and she wouldn’t be aware of it. Anyway that’s for her, as you said. Recently I asked you, Ms Parker, how many casual black-coalminers from the Hunter Valley have referred complaints or matters relating to their pay and entitlements to your office since 2014. Your response was ‘none’. Since that time you’ve been forced to admit that Mr Simon Turner did lodge complaints during this time period. Can you advise if there were more cases? In all instances please advise the outcomes of their complaints.

Ms Parker: We do apologise that we advised ‘none’. We were certainly not trying to hide that. It’s in terms of our search facility. You have to be very precise. This is black coal, and it’s a specific area of black coal. So I apologise. We did correct the record. We’ve had one that we’re aware of, and we’re pretty confident that that’s all we have. As I said, the system searches are maybe not as surgical as we would like. But we’re very much aware of one.

Senator ROBERTS: I take it that the Attorney-General’s Department now, and the preceding minister who looks after industrial relations, are responsible for changing the regulations or the legislation. Who is responsible for advising them of the need to do so? Because casualisation and the abuse of casuals has really been an issue for quite some time, yet now it has landed employer groups and many hundreds of thousands of workers in problems.

Ms Parker: In terms of our role as the Ombudsman, we enforce and apply the law as it stands. As you say, we are not responsible for the policy or legislation.

Senator ROBERTS: No, I didn’t imply that you were responsible for the legislation, but I would have thought that you could have been advising the Attorney-General or his predecessor of the need to resolve this problem, which has been going on now for at least six years.

Ms Parker: We certainly have regular conversations with the Department, Mr Hehir, about a whole range of matters.

Senator ROBERTS: About this issue? When did you start talking about this issue?

Ms Parker: I haven’t discussed this particular issue. We’ve talked about the WorkPack v Rossato issue, how we interpret casuals, and what advice we provide to the public on casual employees. We are aware that the government’s review of the IR system and the working groups are looking at this area of casual employment. We are monitoring that, and we will provide advice and data. We’re happy to share with the committee what we do with the casuals issue and what advice we provide. But in relation to the legislation, that is a matter for the government.

Senator ROBERTS: It’s my understanding that the Fair Work Ombudsman told Mr Turner to ‘go and get a lawyer’ in order to resolve this and that you have denied the existence of casual coal production workers. You are, I hope, aware of the significant damage that this stance of yours has caused both employees and employers, who now have been taking advantage of this and have racked up a huge liability.

Ms Parker: I don’t believe that we would advise anybody to go get a lawyer. We provide advice to people about all the various areas of assistance that are available to them. Where we are unable to help them, as in we do not see that they are eligible for payment based on the definition in the legislation as it stands, we will advise that they may be able to go to small claims or they may be able to take a court case. In fact, as I mentioned earlier, there is a class action being pursued at the moment on this particular issue.

Senator ROBERTS: Have you done anything to actually help Mr Turner and casual employees like him? Why has it taken so long and it’s still not resolved? These people are in limbo, they’re living out of garages, they’ve been traumatised—why?

Ms Parker: We provide assistance to everyone who contacts us. I’d rather not discuss Mr Turner. We don’t talk about specific requests for assistance. We haven’t asked Mr Turner if he minds us talking about him in Senate estimates.

Senator ROBERTS: Mr Turner has assured me that I can inquire about him. He is very distraught about the lack of support he’s received from anyone, including the union; the employer; the mine owner, BHP; state and federal bureaucracies and agencies; Labor MPs; Liberal ministers—he’s at a loss.

Ms Parker: All I can say there is that we have provided—our website says that only staff employees can be casuals under the award. And the webpage references schedule B of the award. It sets out classifications for staff employees et cetera. We’ve provided the factual information that we have on the actual award. Some people were not satisfied with that answer, so the only option we have is to refer them to those other sources of help, including their ability to go to court if they wish to. We’re not a court or a tribunal.

Senator ROBERTS: So there’s a problem here. Obviously within the legislation there’s a problem, and some people are taking advantage of that. You’ve just said, tough, that’s the way the legislation is. You haven’t referred it to anyone who can change the legislation or investigate changing it or advise changing it? These people are still out in the cold.

Ms Parker: The government’s aware of the issues around casuals, and as you know—

Senator ROBERTS: So how long have they been aware of the issue around casuals? Mr Turner has been writing to people in the government since 2014.

Mr Hehir: Sorry to interrupt. I think we’ve talked broadly around the government’s intent to legislate for a definition of a casual and to legislate for casual conversion rights. I accept that the casual conversion rights may not work at this point in time for the individual you are referring to. The issue that perhaps would be worthwhile us meeting with you separately on is how the enterprise agreement definition has actually impacted on the other issues that you raise. What I’m not clear about is how an enterprise agreement arrangement would impact on somebody’s right to workers compensation. So perhaps we could meet with you separately to try and tease out how this all flows to end up where the actual problems are arising. On the face of it, there’s nothing, to my knowledge, that would mean that somebody who has an enterprise agreement isn’t entitled to workers compensation. I’d need to get into more detail to actually understand what’s occurring to cause that break.

Senator ROBERTS: Ms Parker raised Coal LSL, and when she did, I said let’s go to the full scope of how these people are being abused, exploited and neglected. You’ve now raised workers’ compensation as well. That’s not the main issue. The main issue here is the complexity of the issues, and nobody is fixing it: not the state government, not the federal government. No federal or state agency, no politician is fixing this thing. These people are continuing to face this after six years of neglect and exploitation. I asked Ms Parker a simple question: how long has the government known about it? She said, we know the government knows. I want to know how long they’ve known about it. Was it last year, the year before, 2014?

Ms Parker: I was talking about casuals in general. I apologise if I confused you.

Senator ROBERTS: It’s not hard to be confused on this issue, I can tell you, because there are several people who know one thing very clearly: they are not being protected by employers, unions, agencies federal and state, politicians, governments, ministers at all. These people have been left out in the cold. We now know there is no legal pay rate for a casual mine worker. So someone made it up then; otherwise you wouldn’t be able to do a boot test.

Mr Hehir: Senator, that’s not the responsibility of Ms Parker.

Senator ROBERTS: With respect, Mr Hehir, you said it wasn’t the Attorney-General’s responsibility, and I took it that you implied his predecessor. It wasn’t their responsibility. You said look at the Fair Work Commission. The Fair Work Commission told me it’s not their responsibility; look at the Fair Work Ombudsman. We’re getting running round in circles. This is a magic circle.

Mr Hehir: My understanding of the evidence provided by Ms O’Neill was that in assessing the enterprise agreement that you referred to the relevant commissioner, under the legislation, would be required to assess whether that award was better off overall compared—

Senator ROBERTS: I get that, but how can you refer to a rate when there is no rate? I offered her the opportunity of giving her the full-time roster that these people were employed on as casuals. Could you cost that?

Mr Hehir: It’s a very complex process that the Fair Work Commission undertake to make sure that people are better off overall. I think Ms O’Neill’s evidence was that they’ve changed their practices to try and insert more rigour into that.

Senator ROBERTS: But that indicates that there was a problem before the change last year. So what is going to be done to look after the people who were affected by the ‘unrigorous’ system?

Mr Hehir: As I said, you’ve raised a number of issues and circumstances around this particular individual and, you say, others which—

Senator ROBERTS: Hundreds of others.

Mr Hehir: As I said, it would be useful if we could meet to go through the relevant issues. As I said, some of the things that you imply arise from the enterprise agreement definition. I’m not clear how they would cause that. So I’d need to work through that and understand the interaction with the New South Wales workers’ compensation laws. There is a separate worker occurring around the long service leave. But certainly I’m not aware of a circumstance in which the arrangements under an enterprise agreement would impact on workers’ compensation, so I’d need to have a look at that.

In terms of the actual decision, I think Ms O’Neill was clear: if someone didn’t think that decision was appropriate or that enterprise agreement was correctly decided in terms of passing the BOOT, they were able to appeal it. I think Ms O’Neill identified that that particular enterprise agreement has nominally expired and that the other option there is for someone to apply for the agreement to be terminated. They are the technical processes that need to be followed. As I said, there seems to be a complex web of interactions here. It would be useful if we could meet with you to go through those.

Senator ROBERTS: I’m happy to meet privately with you and go through them, but we’ve had several meetings and nothing has happened. What’s my main concern, Mr Hehir?

Mr Hehir: Senator, your main concern seems to be that the individual is stuck in limbo—

Senator ROBERTS: And hundreds of others like him.

Mr Hehir: and that he cannot find a straightforward answer from the Commonwealth government or the state governments.

Senator ROBERTS: He’s wanting more than an answer. He and I are wanting a solution. I’ve got three aims for this, and I’ve said this from the start. This goes back to May last year, and I first raised it around about July  last year and then in Senate estimates and so on. My first aim is to make sure that Simon Turner and other people like him get their fair entitlements—morally fair as well as lawfully fair—and I want him to get some compensation for the trauma he has suffered for the last six years. The second aim is to make sure these practices are stopped right across the coal industry. The third aim is to bring some justice to the perpetrators of this, who in my opinion are BHP, Chandler Macleod and the Hunter Valley division of the CFMMEU. That’s what I want. Is there any way you can help us in achieving some of those three aims?

Mr Hehir: We can certainly look at what the legal entitlements. In terms of the moral entitlements, I’m not sure exactly what you mean by that. The legal entitlements we can certainly examine.

Senator ROBERTS: If you go beyond the nitpicky words of the law and you look to the intent of the law,  he’s been diddled by some mistakes, some ways of interpreting the law wrongly. Everyone knows that a minor who works in a black coal mine is entitled to workers’ compensation under coal miners’ insurance. There was nothing for him. I’m not going to ask your salary, but he’s existing on $20,000 a year—a fraction of what he used to have.

Mr Hehir: As I said, I’m not aware of what impact his enterprise agreement status would have on his workers’ compensation. I’ve offered to meet with you to go through the details to try and understand how that flows.

Senator ROBERTS: I’ll happily agree to that. But my second concern is that this has been going on unresolved for 16 months now, and I don’t see any sign of it being resolved. These people are still being left in limbo. They’ve just been discarded. My concerns now have become: What are the federal government agencies doing, and is the government at all interested in doing this? How can we possibly support changes to legislation when they’re not even enforcing the current legislation or leaving people out in the cold and there doesn’t seem to be any intent or desire to fix it?

Mr Hehir: That’s certainly not my understanding of the Attorney’s view. As I said, I’m happy to meet to go through the detail. I know that there’s work underway in relation to long-service leave, which was the issue that I recall you—

Senator ROBERTS: After first being denied that there was an issue and then admitting it—that’s a pleasant sign. It took us months to get that.

Mr Hehir: As I said, there is work underway to try and resolve the long-service leave issue. In relation to the actual approach around the enterprise agreement, as I said, I’m happy to have a look at the interaction with other matters. But the enterprise agreement was a document that was accepted by the Fair Work Commission once the employees had voted on it.

Senator ROBERTS: After what we now see—an admission that it’s been tightened up and made rigorous, which implies to me that, before, it wasn’t. So there’s been no investigation of that from what it seems.

Mr Hehir: Ms O’Neill, I think, was at pains to point out that she wasn’t making the statement that the previous process had caused any issues with that particular agreement.

Senator ROBERTS: But there were changes to make it more rigorous, implying that it wasn’t as rigorous before. What I’m seeing is that the Fair Work Ombudsman is not taking responsibility for suggesting changes to a problem or solutions or even identifying the need to investigate a problem to the Attorney-General, and I’m also seeing that it’s not the Fair Work Ombudsman’s responsibility to come up with a solution. So how does the Attorney-General possibly identify this? This just sits there, and Simon Turner keeps sleeping in a garage.

Mr Hehir: As I said, the responsibility for the actual awards and the approval of the agreements is the responsibility of the Fair Work Commission. Ms O’Neill has outlined what she believes are the alternatives there and taken some questions on notice. In relation to the issue around whether Mr Turner was a genuine casual or whether he was should have been classified as an ongoing employee, the Attorney has identified that he intends to introduce legislation in this calendar year to deal with the definition of a ‘casual’ to make it clearer for both employers and employees of what their actual status is and to also provide greater clarity and certainty around the

right to convert. So, in terms of the future, that particular aspect is certainly being looked at. As I said, I’d need to have a look at the interactions with the other jurisdictions.

Senator ROBERTS: I’m concerned that the application that the government has submitted to be part of their Rossato case—I don’t know the technical legal term—was accompanied by some pretty inflammatory rhetoric. All I see in the Rossato case is a decision that says: ‘You tried to have these people passed off as casuals. They’re really permanents.’ So I think we need to have a lot more openness, candour and honesty from the government on Rossato.

Mr Hehir: As I said earlier, the government’s primary interest in Rossato is clarifying whether any claim for the National Employment Standards made by someone who believes they were never or are no longer a casual is able to be set off by the loading. That’s where our interest is, and that’s where the focus is.

Senator ROBERTS: In my opinion, the Rossato decision makes that clear. But that’s up to you, of course.

CHAIR: Senator Roberts, how long do you think you’ve got?

Senator ROBERTS: Probably another two questions.

CHAIR: That’s okay. Then I’ll go to Labor.

Senator ROBERTS: I have some questions for you as a participant in this process, Ms Parker: Is  the industrial law in this country at the moment too complex? Is it impossible to cover everything, impossible to enforce and impossible to understand? How can an everyday worker who doesn’t want to become a lawyer possibly understand what’s going on? He relies on other people to interpret for him or her.

Ms Parker: For the bulk of the workforce, who are on awards or agreements, it’s relatively simple. They don’t have to read the whole award. They don’t have to read the whole agreement. They obviously need to understand what they should be getting paid and what their entitlements are. We provide a lot of assistance to people who phone us and ask us. If they have concerns then we help them. We have a pay and conditions tool that they can look at to work out what they should be paid. There’s a lot of information out there to assist workers, and we do that to the best of our ability. There is some complexity in the system but, for an individual worker looking at their own individual entitlements, it should not be that complicated. Obviously, if you look at the whole Fair Work Act and see how large it is, you’ll say it’s really complicated, but most people don’t need to look at the whole Fair Work Act; they only need to look at a small component of it.

Senator ROBERTS: Mr Turner impresses me as being very intelligent, very capable and very astute, as does Stuart Bonds, who’s tried to help him with this issue for 16, 17 or 18 months now, and they just can’t get through it. I don’t think it’s a matter of the complexity by itself; it’s a matter of the complexity of all the hangers-on they’re trying to drag with them and trying to shake some sense into. There’s something in this mess that’s causing these people to be discarded and exploited. First of all, a company like Chandler Macleod can exploit them. The Hunter Valley division of the CFMMEU enables that, and BHP gets away scot-free and avoids its corporate and moral responsibilities. These people are tossed on the scrap heap. So there’s something wrong with this system. The whole system has broken down.

Ms Parker: This is clearly a complex case. It’s clearly a complex award and a complex enterprise agreement. Our role is to try to make it as simple as we can, but we can’t change what the agreement actually says. It was negotiated; it was approved. It therefore is in play. What the Fair Work Ombudsman—

Senator ROBERTS: So, after six years with the Fair Work Commission, the Fair Work Ombudsman and the Attorney-General’s predecessors, they’re still here. I think we’ve done this enough for now. You know where I stand.

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Questioning Coal LSL – Worker’s Entitlements

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During Senate Estimates earlier in the year, I was able to get Coal LSL to admit that there were discrepancies in hours worked reported by employers and to start an audit. Since this questioning, many other workers have come forward with issues and questions they wanted asked in Senate Estimates. Accountability and transparency seems to be lacking and workers are in the dark as to best manage their long service leave entitlements.

Transcript

Senator ROBERTS: Thank you, Chair. Thank you both for appearing today. Could you tell me, firstly, what has Coal LSL done since last estimates to address the errors and wrongs identified in employer data and when  will people be compensated, and what is the total value of the errors to date?

Ms Perks: I’ll start with—

CHAIR: We’ve lost you, I think, again. Hello? Can we hear you? Can you speak again?

Ms Perks: Yes. We’re getting a delay.

CHAIR: You’re getting a delay; a delay on your voice? So there’s an echo? We might pull the plugs out. We will suspend briefly again, so can you log off and log on again, please? Thank you.

Ms Perks: We will.

CHAIR: Thank you. Senator Roberts.

Senator ROBERTS: Thank you, Chair. What has Coal LSL done since last Senate estimates to address the errors and wrongs identified in the employer data and when will people be compensated, and what is the total value of the errors to date?

Ms Perks: Thank you, Senator. The six individuals who were identified back in October who were employed by the Programmed TESA Group have had their records adjusted and it has resulted in a change of 55 hours of entitlement for the total six out of the eight that were identified. Since October, Programmed Tessa, who was the employer—

CHAIR: I think what happened there is that there was more feedback.

Ms Perks: We’re getting the question coming back, circling.

CHAIR: Okay. So the question is on repeat. That would be  amusing.  It’s  a  very  important  question, Senator Roberts. We will suspend again briefly and we’ll do it through Chorus Call. Someone from the secretariat will be in touch to advise you how to do that. We will get you on the phone but not via videoconference.

Ms Perks: Okay.

CHAIR: For the third time, Senator Roberts is going to ask his question. Senator Roberts.

Senator ROBERTS: Thank you, Chair. What has Coal LSL done since last Senate estimates to address the errors and wrongs identified in employer data and when will people be compensated, and what is the total value  of the errors to date?

Ms Perks: Since the last Senate estimates in March the focus of the organisation has been on getting visibility of the issues that were identified. The six individuals who were addressed in the October Senate estimates have had their records updated, which resulted in a change of 55 hours of entitlement for the six in total. Regarding the other two individuals of the eight, it hasn’t resulted in a change in their record on that review. Now, in saying that, what has commenced outside of those six individuals has been a commitment by Coal LSL to commence an audit of the employer data for any employers who have casual employees within the Coal LSL scheme. That audit has commenced and is in train. We don’t have visibility yet of what the outcome of the audit will be or any changes to individuals’ records as a result of that audit.

Senator ROBERTS: Thank you. The second question: why doesn’t a casual get the same Coal LSL payout as a permanent employee when they both work the same hours and roster on the same site in the same role? If this is because of the act, why hasn’t Coal LSL referred the matter to the government and why hasn’t the government fixed this?

Ms Perks: If a casual employee works a 35-hour week, which is a full-time equivalent, they will accrue the same long service leave entitlement as a full-timer. Our records for the employee are held in hours, and if the employee does work for 35 hours during the week their records will be at that full-time equivalent maximum entitlement.

Senator ROBERTS: Thank you. Are casuals made aware that they can waive the Coal LSL scheme and have the contribution paid direct to them? As you will appreciate, this would benefit a lot of casuals that may not stay for the eight-year qualifying period.

Ms Perks: I can’t talk to whether casuals, in particular, have visibility of that. It was an enhancement in our legislation back in 2010 to include waiver agreements as an option for all employees in the scheme. I can take that question on notice. From memory, we have as minimal as four waiver agreements, but I will verify that number and confirm that.

Senator ROBERTS: Sorry, what was that last sentence you said?

Ms Perks: From memory, I think we have four waiver agreements in place out of 426,000 records, but I will take that question on notice and verify that.

Senator ROBERTS:   Why,  if a  casual does take  the Coal LSL waiver option,  do  casuals only get paid   two per cent when the Coal LSL payout is based upon 2.7 per cent?

Ms Perks: All employees, irrespective of their employment status, would be paid based on certain criteria in the legislation which my colleague Mr Kembrey will talk to. The two per cent that you’re talking about is our payroll levy and is not correlated with an employee’s long service leave entitlement. That percentage is in relation

to the payroll levy that employers are required to pay. It is a tax that’s imposed, and that levy of two per cent has been in place since 2018. Prior to that it was 2.7 per cent, but it was reduced in 2017 to that lower level. It’s a rate that’s applicable to all employers who are registered in the fund.

Senator ROBERTS: Could you please provide details of the number of casual employees who have contributions made to the scheme for them and detail how they may have been paid out? How many have left the industry and how much money does this represent for those employees who have not returned to the industry in, say, over three years? In other words they haven’t been paid out and they’ve left the industry.

Ms Perks: I could talk to the amount of casuals who are active in the industry today. According to our  records, in round figures it’s 9,000. I will need to take your other questions on notice. They are quite detailed questions that will need to be responded to.

Senator ROBERTS: Yes, that’s fine; take them on notice. They are very important to us. Can you explain in detail why the amounts contributed by employers to Coal LSL for eligible employees, both permanent and casual, are different to the amounts paid out for those employees? Could you please explain the reasons for the discrepancy in detail, the break-up of what funds go where and the total value that this represents annually?

Ms Perks: There are two important components of the fund. The payroll levy is a tax that’s collected on behalf of the government. That is received monthly by employers. It is remitted to the commonwealth and appropriated back. Separate from that is the records that we hold for all employees in the fund, and that entitlement is accrued in hours. The payment that’s made to the employee will be reliant on their employment agreement. Our legislation does specify the minimum that should be paid. Mr Kembrey might be able to refer us to the section in the legislation that talks about minimum payments that are required on termination or in-service leave. But it is a different part of the legislation to the payroll levy collection act, which talks about levies that are received for the fund.

Senator ROBERTS: Thank you. Is Mr Kembrey going to add anything?

Mr Kembrey: The best way to break down the question is that the payment of levy is not necessarily correlated with the accrual of the entitlement. When entitlements are paid, they are paid at the rate that the employee is earning at the time that they take that long service leave.

Senator ROBERTS: Can you please reconcile the difference between employer contributions and employee payouts? Please also advise what happens to, firstly, the funds where an employee leaves the industry prior to qualifying and fails to return to the industry and, secondly, the total amount of these funds where employees have left the industry, how much is dispersed, and to whom, on an annual basis over the last seven years.

Ms Perks: The fund is a pooled fund. It’s important that employees of the fund understand we are very different to a financial institution and super funds. The fund is a pooled fund. The nature of portable long service leave means employees can move in and out of the industry, and they can have a maximum break from the industry of eight years before their qualifying service accrual is impacted. That’s important context. We must hold the funds for that period of a break in service of eight years, in case that employee returns to the industry, so that we can continue to ensure that we have sufficient funds to pay out for future long service leave.

The actuary assesses and protects the fund’s assets and liabilities based on important assumptions. One is investment returns. There is also the probability of employees reaching eight years of qualifying service. In regard to the employees that you’re talking about, the probability of an employee meeting that eight years of qualifying service starts at a base of 50 per cent. Our data tells us that an employee that’s been in the industry for less than one year has a 49 per cent chance of meeting that eight years of qualifying service. We hold the funds as a pooled fund through that duration of a maximum of eight years break period to anticipate that future liability that the  fund may incur. It is a complex calculation that the actuary conducts. It has fundamental assumptions that underpin that assessment of the fund’s assets and liabilities.

Senator ROBERTS: Could you please tell us how much money is involved in people who have gone beyond the eight years and are not in the industry, and won’t ever get a payout? What happens to their money?

Ms Perks: Senator, can you ask that question again, please?

Senator ROBERTS: If someone leaves the industry and a period of eight years lapses, what happens to their money?

Ms Perks: The fund is structured as a pooled fund. Employers pay a tax to the government that is appropriated back to the fund. The actuary assesses assets and liabilities. We hold an entitlement in hours for the employee. We do not hold an asset which is financially attributed to that individual record. I’m being specific but the record doesn’t have a monetary dollar correlated with it at the record level. It is reported in hours. The actuary assesses

based on the hours that we hold, and 55 million hours of entitlements were held at June 2020. The actuary assesses the likelihood of paying liabilities out of the fund based on the entitlements that are held in hours.

Senator ROBERTS: You would still have to account for everything in a dollar sense if it’s a pooled fund, wouldn’t you? Some people are not going to come back after eight years, so what happens to that money? What happens to those hours? Where do they end up?

Ms Perks: If an employee has a break from the industry for eight years or further, their records will cease to accrue. If they return to the industry they would start from zero years of qualifying service again. So it is an eight years break, which is the most generous break that any long service leave provision allows for. The actuary assesses the likelihood of someone returning to the industry. In that assessment the actuary says that the fund needs X dollars to pay out future liabilities. With that they correlate a payroll levy that is appropriate to be imposed on employers in regard to the collection of future levies.

In the situation where we have seen a larger number of employees not returning to the fund, one would assume that could result in the pooled fund increasing and the liabilities would decrease. If our assets are in excess, that could result in us recommending to the minister to reduce that payroll levy further from that two per cent to a lower rate. The assets and liabilities are correlated continuously by the actuary to assess whether the payroll levy that’s imposed on employers is sufficient to meet the liabilities that are projected to be incurred by the fund in the future.

Senator ROBERTS: Are you saying that if someone is out of the industry for more than eight years, if they come back after that, they will go back to zero and start again? If there’s a surplus or an excess of funds in the pooled fund, the minister will have a recommendation to reduce the payroll levy?

Ms Perks: That is it, in a simplified manner, yes. The three correlate, yes.

Senator ROBERTS: In 2019 I drew to your attention discrepancies and outright employer misreporting.  What have you done to fix all employee entitlements? What steps has Coal LSL taken? If this response took the form of, say, a review project, when will the project be completed, how much will the project have cost and will Coal LSL be prosecuting employers who have negligently or wilfully misreported or mispaid Coal LSL contributions?

Ms Perks: The important action that Coal LSL has taken since March is to commence an audit of employers  of casuals; 9,000 casuals are active in the industry to date. That audit program will extend to review those records. That is in train. The outcomes of that audit will be assessed, and certainly they will be reviewed as to whether rectification or penalties would be appropriate if there’s any understanding of deliberate misreporting of hours.

Senator ROBERTS: You have the ability to penalise employers and prosecute them; is that right?

Mr Kembrey: In certain circumstances, that is correct. In terms of the time lines, it will be a rolling time line. We’re in the early stages of this. We’d expect to see some results of the audit in the next month or two, and that rolling out over the next 12 months.

Senator ROBERTS: If Coal LSL is not prosecuting any parties for negligent or wilful misreporting, could  you please advise us of the assessment process that Coal LSL went through, how this assessment process was managed, by whom, and also explain in detail, despite the evidence of misreporting, why no parties were held to account? You won’t be able to do that for another month, at least, but would you be able to do that, please?

Mr Kembrey: Certainly, we can take that on notice.

Senator ROBERTS: Thank you. Could you please report whether any members of the Minerals Council of New South Wales were parties or related entities to those who misreported, and provide a list of same, including the number of instances by entity? You can take that on notice as well, because that won’t be able to be done for at least a month.

Mr Kembrey: Yes, Senator.

Senator ROBERTS: Thank you. I also have concerns, as we’ve spoken about in the past, with regard to the governance of Coal LSL. I’d like some data, please. Could you provide an Excel spreadsheet that includes all employers registered with Coal LSL covering the period 1 July 2012 to 30 June 2020, including the company or business name, their ABN, the authorised officers, active dates, and details of payments or reimbursements made to each registered employer for the subject period?

Mr Kembrey: Senator, that would be an extensive task. Potentially, we could discuss what the information is that you’d like from that, over an eight-year period. When you say ‘authorised officers’, I’m assuming you mean directors?

Senator ROBERTS: Yes, the people you’re dealing with.

Mr Kembrey: Often we’re not dealing directly with directors; we’re dealing with employees of the company. Senator, perhaps we will take this question on notice and we can talk further about how we could present the material that you’re after.

Senator ROBERTS: That would be great; thank you. Could you also please provide details of the process used to calculate payments to entitled employees; that is, how the amounts received, the entitlement and other costs, or inputs and outputs, are calculated? I’d like to understand the process.

Ms Perks: We’ll take that question on notice. We can certainly give more context to the payroll  levy collection, the calculation of the entitlement and the employer reimbursement rules that relate to the outflow.

Senator ROBERTS: Thank you. Can you please provide details of where Coal LSL funds received for workers who leave the coal industry are held at all material times—I know you talked about them being in hours—who has the records, and the details of the process following the cessation of contributions for employers? Could you tell us where the hours or money goes? Could you also please include full details of where these funds are ultimately repatriated and full details of any service fees, costs or commissions paid and who they are paid to?

Ms Perks: We can take that on notice, Senator. I can say there are no commission service fees in regard to payments, but we will take that question on notice.

Senator ROBERTS: Thank you. Could you please provide an Excel spreadsheet of all entities that Coal LSL pays or transfers funds to, including but not limited to company business name, ABN, authorised officers, dates and details of payments or reimbursements made to each entity, including total payments, and an explanation as  to the payment—for example, fees et cetera?

Ms Perks: Is that in relation to the employers in the fund or are you talking more broadly of every transaction that the fund incurs?

Senator ROBERTS: No, just the payments that are made to people who are entitled to have Coal LSL.

Ms Perks: We’ll take that on notice, yes.

Senator ROBERTS: Thank you. I’m led to believe that registered employers have great difficulty in reconciling the payments made to entitled employees by Coal LSL as they don’t seem to correlate to the employer contributions. Could you please detail the reasons for any differences between employer contributions and the total amounts paid to eligible employees and, in this regard, please advise where unallocated, surplus or  remaining funds or hours are allocated and please advise whether this allocation complies with your constitution and governance framework? Have these matters been raised in any internal or external audit over the period 1  July 2012 to 30 June 2020?

Ms Perks: The first part of the question I’m taking as being similar to a previous question; so we’ll answer that in light of the previous question. Coal LSL is audited by the Australian National Audit Office annually. The audit has been completed. There are no findings in the audit and we’ve had no findings in our audit for the last two years. We can give you a copy of that audit report. It is included in our annual report, which is going through the tabling process currently; so that is available for the public’s review.

Mr Kembrey: I note that in that question there were about five questions; so we’ll take a number of those later ones on notice. I think the first point that you raised was in regard to employers struggling to correlate the reimbursement to the payment to employees; is that correct?

Senator ROBERTS: Yes, that’s correct.

Mr Kembrey: The matter of what is paid to an employee is a matter that is to be decided between the employer and the employee. Then the employer requests a reimbursement for that payment and we need to see some evidence that the money that they are requesting from the fund was paid to the employee. And with the reimbursement, there needs to be some correlation with the levy payment that they’re paying—in a sense, the salary, the payment or the wages that they’re paying a levy on—so that we can ensure that either they’re not being over-reimbursed or the employee certainly is not receiving the reimbursement in full. That’s where the correlation should be. Without any specifics, it’s difficult for me to talk to it.

Senator ROBERTS: Then we might be in touch with you for more on that. I’ve raised many concerns in regard to the treatment and payment of Mr Simon Turner. I note that you’re aware that Mr Turner was forced to leave the coalmining industry due to workplace injuries at the Mt Arthur coalmine that left him totally and permanently disabled, TPD. I note that, approximately three years after my raising these injustices in Senate estimates, Mr Turner has had his case only partly reviewed  and  that Chandler  Macleod, his  employer,  and  Coal LSL have yet to resolve his termination status as being TPD. When will this status be updated and when will Mr Turner’s outstanding questions be addressed?

Mr Kembrey: As we discussed back in the estimates in March, we have been assisting Mr Turner for a number of years now. And the difficulty with that particular issue you’re raising is that that is a dispute between Chandler Macleod and Mr Turner. We have been trying to mediate that and obtain some factual evidence to support the position put forward by Chandler Macleod. At this point in time the parties are holding their positions and they don’t agree with each other. The last we were advised is that those matters are subject to court proceedings in the Federal Court at present. So there is not anything more we can do to try to resolve that, unfortunately.

Senator ROBERTS: What sorts of records would you turn to for proof?

Mr Kembrey: We would turn to contemporaneous correspondence that evidences the reasons. As you know, this is a dispute about the reason why Mr Turner was terminated by Chandler Macleod back in 2016; so we have requested contemporaneous material that supports the position that Chandler Macleod put forward or justifies that position, and that has been provided. We’re not in a position to make a legal assessment of that, because that is not our role; the Fair Work Commission has the power to do that. But I believe that Fair Work Commission proceedings are on foot and those  proceedings  have  been  transferred  to  the  Federal  Court.  Hopefully,  for Mr Turner, there is some resolution to that matter in the near future.

CHAIR: Senator Roberts, just before your next question, we will be breaking at quarter to four for the afternoon tea break and concluding with these witnesses and I know that Senator O’Neill does have some questions. If the two of you could perhaps have a conversation about timing for the remaining nine minutes that would be fantastic.

Senator ROBERTS: I’ve got four more questions that I’ll put to you on notice, Mr Kembrey and Ms Perks,  but I’ll ask this question: Queensland and Hunter Valley coalminers and coalminers everywhere expect Coal LSL to maintain a high standard of probity. Casual coalminers expect that you will do the right thing by them and give them the freedom of choice to  waive  the Coal LSL contributions for them to  receive  the 2.7  per cent or the  two per cent as additional income. I just want to make that point on the record.

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