Carey Trundle (2) 150811

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Womens Access to their Rights and Entitlements

Abstract

For the first time in Australian history a Paid Parental Leave Scheme (PPL) has been enshrined in law,

commencing from 1 January 2011. The Paid Parental Leave Act 2010 (the Act) provides up to 18

weeks of payment at the minimum wage level and operates in addition to any existing employer

schemes and the unpaid parental leave entitlement under the National Employment Standards (NES).

The Fair Work Ombudsman is legislated to undertake investigations into allegations of non

compliance with the Act by employer paymasters. The Act poses a challenge for regulatory

Agencies who monitor and enforce its requirements.

The compliance role and compliance tools conferred by the Act will influence the investigative

mindset of the FWO processes and this paper/presentation seeks to identify a number of possible

scenarios which will present both challenges and opportunities to current FWO compliance and

enforcement processes.

Regulatory challenges in the enforcement of Australias first Paid Parental Leave Scheme

For the first time in Australian history a Paid Parental Leave Scheme (PPL) has been enshrined in law,

commencing from 1 January 2011. The Paid Parental Leave Act 2010 (the PPL Act) provides up to 18

weeks of payment at the national minimum wage level and operates in addition to any existing

employer schemes and the unpaid parental leave entitlement under the National Employment

Standards (NES).

The PPL Act poses a challenge for regulatory Agencies who monitor and enforce its requirements.

This paper examines the compliance role the Fair Work Ombudsman (FWO) has in the new

regulatory scheme and some possible scenarios that may arise following the Schemes full

implementation on 1 July 2011 when eligible employers became the paymasters.

The FWO is a statutory office established by the Fair Work Act 2009 (FW Act). It is located within the

Education, Employment and Workplace Relations portfolio. The FWO is responsible for providing

education, assistance and advice about the Commonwealth workplace relations system. In

addition, the FWO is responsible for impartially enforcing compliance with the FW Act and fair work

instruments. The FWO has been the industrial relations regulator since 2006, established by the

Workplace Relations Act 2006 (WR Act) as the Office of Workplace Services and subsequently the

Workplace Ombudsman.

As a regulator the FWOs role in compliance and education activities is set down in the FW Act. The

regulatory role of the FWO is to ensure compliance with the FW Act and its activities include

undertaking investigations and compliance activities in regard to allegations of contraventions of the

legislation.

Australias Paid Parental Leave Scheme

With the introduction of the PPL scheme, Australia joined the majority of other OECD countries in

enshrining paid maternity leave into legislation. The Paid Parental Leave Bill 2010 was passed by



the Australian Government on 21 June 2010 following over two years of policy development and

public consultation1.

Paid Parental Leave seeks to address specific employment related objectives and needs, for those

parents within the workforce and is not part of a social welfare model 2. The Productivity

Commissions Report3 states that evidence and theory suggest that a paid parental leave scheme will

increase womens participation in the workforce prior to childbirth and maintain a womans link to

the workforce4. These policy drivers are evidenced in the processes of the PPL Scheme in particular

through the paymaster system.

From 1 January 2011 to 1 July 2011 employers were given an opt in provision for any employees

eligible to receive Parental Leave Pay (an employer, with agreement from their employee, could opt

to act as paymaster). Anecdotal evidence from Centrelink suggests this initial opt in provision was

not heavily accessed by employers during the eligible time period. From 1 July 2011 the Department

of Families, Housing, Community Services and Indigenous Affairs estimated 79% of eligible parents

would be provided with their Parental Leave Pay entitlements via their employer as paymaster post

1 July 2011.

The role of paymaster under the PPL Scheme is one of administrator. Part of the administration for

a business is to ensure they are registered with the Centrelink Family Assistance Office. Upon

registration of an eligible employee Parental Leave Payments are deposited into the bank account of

the paymaster, either as part of the employers identified usual pay cycle or over three six weekly

instalments. The paymaster is responsible for keeping and providing financial and payment records.

Unpaid Parental Leave funds not dispersed to an employee, in situations such as an employee

returning to work during the Paid Parental Leave period, must be returned to Centrelink.

The PPL Scheme is funded by the Australian Federal Government. Broadly, [t]he Scheme provides

working mothers, and the initial primary carers off adopted children, with access of up to 18 weeks

parental leave pay at the national minimum wage while they stay at home to look after their baby or

adopted child5. The Scheme is intended to complement and supplement existing entitlements to

paid or unpaid leave in connection with the birth or adoption of a child.

Eligibility requirements include:

o You are the primary carer of a newborn child or initial primary carer of a recently

adopted child; and

o Meet the Paid Parental Leave work test before the birth or adoption occurs; and

o You have an annual income of $150,000 or less; and

o You are on leave from the time you become the childs primary carer until the end of

the paid parental leave period; and

1Fair Work Amendment (Paid Parent Leave Bill) 2010 ExplanatoryMemorandum

2Australian Government Productivity Commission, Paid Parent leave: Support for Parents with Newborn

Children. Productivity Commission Inquiry Report No 47, 28 February 20093

As per 24

As per 25 Memorandum of Understanding between Centrelink and The Off ice of the Fair Work Ombudsman



o You are living in Australia and you are a permanent resident or citizen6.

Generally, the work test requires the primary carer claiming the Parental Leave Pay to have worked

10 out of the preceding 13 months prior to the birth/adoption. It should be noted that the work

period does not have to be with one single employer, compared with the National Employment

Standard unpaid maternity leave requirements. Section 67 of the FW Act states the General Rule

employee must have completed at least 12 months of service to gain an entitlement under Section

70 of the FW Act, the entitlement to unpaid parental leave. The requirements between the National

Employment Standards and the PPL Scheme work test identify the first challenge for regulators.

Consequently, a party may be eligible for payment under the Paid Parental Leave Scheme, but not

eligible for unpaid parental leave under the National Employment Standards. However, this I would

argue is a legislative challenge rather than a regulatory one and it is envisaged future amendments

to the FW Act will resolve this.

The FWO Compliance Role

Part 4-2 of the PPL Act sets out the FWOs statutory functions in regards to the administration of the

Paid Parental Leave Scheme. Section 141 of the Act details the Functions of the Fair Work

Ombudsman as:

(a) To inquire into, and investigate, any matter referred to the Fair Work Ombudsman

under section 143;

(b) To commence proceedings in a court in relation to a contravention of section 70 (which

deals with unauthorised deductions from [Parental Leave Payment] instalments), or Part

3-2 (which deals with payment of instalments by an employer [paymaster]);

(c) Any other function that is incidental to the function referred to in paragraph (a) or (b).

Enforcement options available to the FWO where contraventions by a paymaster of the PPL Act have

been established are the issuing of a Compliance Notice (section 157 of the PPL Act) or the issuing of Infringement Notices (section 159 of the PPL Act). In addition, as set out above, the FWO has the

function to implement proceedings in court upon the identification and establishment of

contraventions.

Contraventions under the FW Act that are subject to FWO investigation are:

y Non payment of a Parental Leave Payment instalment7;

y Unauthorised deductions from Parental Leave Payment instalments8;

y Record keeping obligations9

Fair Work Inspectors appointed under the FW Act may exercise their compliance powers to

investigate and determine contraventions of the PPL Act. These investigative powers include

requesting records, entering premises and undertaking interviews.

6http://www.centrelink.gov.au/internet/internet.nsf/individuals/ppl_working_parents_eligibility.htm

7 Paid Parental Leave Act 2010 Part 3-2

8As per 7 Section 70

9As per 7 Sections 80-81



In order for the FWO to investigate alleged contraventions of the PPL Scheme a referral must be

made by Centrelink to the FWO10. A Memorandum of Understanding (MOU) between the Fair Work

Ombudsman and Centrelink was finalised in March 2011. The MOU details the processes for

disclosure and exchange of information between the two Agencies for the purposes of ensuring

compliance under the Paid Parental Leave Scheme.

Prior to referral from Centrelink to the FWO, where possible non compliance by the paymaster has

been identified, Centrelink undertake their own dispute resolution process. Following referral to the

FWO the Centrelink Family Assistance Office (FAO) forms the role of Paid Parental Leave provider11

thus ensuring families are not continuously disadvantaged by a paymasters actions. The FWO role is

not one of a debt collector. The FWO will investigate and attempt to recover Parental Leave Pay

from the date the recipient has first failed to receive Parental Leave Pay to the date the FAO has

assumed the role of provider. Any remaining unpaid monies that fall due after this date will be

dealt with through Centrelink s debt recovery processes.

In addition to the FWOs role in the recovery of Parental Leave Payments, a referral may also be

received for investigation into an employers failure to:

o Provide Parental Leave Pay in accordance with the claimants normal payroll cycle;

o Provide an employee with reasonable access to a written record of their Parental

Leave Pay; or

o Keep proper records of Parental Leave Pay funds received from Centrelink and

Parental Leave Pay paid to claimants12.

These contraventions are viewed as technical contraventions of the PPL Act and may only come to

the attention of Centrelink (and subsequently the FWO) where the contraventions of failing to

provide Parental Leave Pay or unauthorised deductions from Parental Leave Pay have occurred.

However, if these technical contraventions are identified during the course of investigations

regarding contraventions of the FW Act (as opposed to the referral process), they will be pursued as

would a direct referral from Centrelink.

Where a record keeping contravention of the PPL Act is determined it is open to the FWO to

determine the appropriate enforcement option and this may include the issuing of an Infringement

Notice for 15 penalty units for a body corporate or 3 penalty units to a person other than a body

corporate. This equates to $1,650 or $330 respectively13. The FWO may determine an Infringement

Notice as the most appropriate enforcement option in situations where an investigation has

determined a contravention in regard to a repeat offender, where an employer has refused to

engage with the regulator or it is determined an employers actions have been deliberate with no

demonstrated action regarding rectification or future behaviour.

Following a referral to the FWO from Centrelink identifying an alleged contravention of the PPL Act,

the referral is registered on the FWO Case Management System and is subject to the FWOs Assisted

Voluntary Resolution processes. These are undertaken by a FWI as a desk based investigation. The


11As per 5 page 5

12As per 5 page 5

13 C rimes Act 1914 Section 4AA



Assisted Voluntary Resolution process is an informal form of dispute resolution with the FWI acting

as a medium for information exchange between the parties in an attempt to seek resolution and

compliance. No formal determinations are made by FWIs undertaking these processes and no

enforcement correspondence (such as Compliance or Infringement Notices) are entered into.

During the FWO PPL investigations the Assisted Voluntary Resolution stage of the investigation is

relatively short - seven days. The short time frame in this phase reflects the opportunities previouslyafforded for resolution through the Centrelink resolution and review processes.

Theoretically (as at August 2011 no referrals have been made to the FWO) the alleged

contraventions referred for investigation appear uncomplicated. Evidence is not in dispute that the

paymaster has received monies from Centrelink, thus creating a statutory obligation on the

paymaster to pass Parental Leave Payments to the entitled party. Evidence has been provided to

Centrelink by the entitled party that the Parental Leave Payment has either not been passed on or

has been subject to unauthorised deductions. Consequently, it would not be appropriate for the

FWO Assisted Voluntary Resolution process to be lengthened outside of the current seven day

process.

Following non resolution at the FWO Assisted Voluntary Resolution stage the allegations are

referred to a field based Fair Work Inspector for full investigation. A full investigation includes

gathering further evidence from both parties, most often through the service of a Notice to Produce,

undertaking records of conversation and conducting interviews with relevant parties and witnesses.

A FWI at the conclusion of the investigation makes a determination as to the contravention and

identifies the appropriate enforcement action.

TheMOU between the Agencies provides for a two way exchange of information. Under sections

144 and 158 of the PPL Act the FWO is obliged to inform Centrelink of the outcome of any alleged

contraventions referred. The exchange of information is subject to processes established in the

C entrelink and The Office of the Fair Work Ombudsman Paid Parental Leave Guidelines.

Hypothetical Paid Parental Leave Investigation Scenarios

1. The interaction between Paid Parental Leave entitlements, accrued leave entitlements,

National Employment Standard entitlements and the entitlements and obligations of other

applicable industrial instruments.

The FWOs role in assessing and enforcing multiple entitlements is varied. A FWO

investigation regarding PPL entitlements does not involve the assessment of whether an

entitlement exists, having been previously determined by Centrelink as existing and

consequently provided to the pay master for distribution to the intended recipient.

This is divergent to the FWOs role in undertaking investigations and making determinations

into entitlements accrued under the NES and other applicable industrial instruments. In

FWOs traditional entitlement investigations a FWI begins with a blank sheet in regard to

any determination, one of the initial enquiries a FWI must turn their mind to is whether an

employment relationship exists before any entitlements can begin to be established.



During the course of a Paid Parental Leave investigation a Fair Work Inspector may be

presented with a situation where a paymaster has received the parental leave payment but

is in dispute with Centrelink as to the employer determination under the PPL Act. An

employer determination is subject to a review/appeal through Centrelink processes. It is

however, envisaged employer determination disputes would have been exhausted prior to

any referral to the FWO.

It is predicted that investigation referrals from Centrelink may be as a result of the

paymaster failing to pass on the parental leave payment to an eligible employee on the basis

of other leave entitlements accrued under applicable industrial instruments, such as,

accrued annual leave and/or an industrial instrument providing for paid maternity leave

outside of the PPL Scheme. Actions by a paymaster in this situation are contraventions, an

employees entitlement to Paid Parental Leave sits in addition to other leave entitlements.

Consequently, the investigation may determine contraventions under both the PPL Act and

contraventions relating to entitlements accrued in accord with the FW Act. Any complexity

of the interaction of the relevant legislations will be identified through an investigation that

is not limited to the Centrelink referral.

2. The enforcement options when undertaking investigations involving a paymaster who has

entered into liquidation following receipt of Parental Leave Payment from C entrelink.

However unlikely a particular scenario may appear it is always likely a regulatory agency

such as the FWO has been or will be presented with it at some stage. This scenario

envisages a multitude of payments from Centrelink to a paymaster who subsequently enters

into liquidation and as a consequence fails to meet their compliance obligations in

distributing the Parental Leave Payments to the eligible employees.

FW Act entitlement investigations undertaken by the FWO are not immune to these

situations. In some non PPL entitlement investigations complainants will be referred to the

General Employee Entitlements and Redundancy Scheme as the most appropriate means of

accessing any outstanding entitlements. However, in situations where an investigation has

established an entitlement is outstanding and a person, such as a Director, has been

involved in the contravention of a provision of the FW Act, the person will be treated in the

same way as the actual contravention14. This makes the person involved in the

contravention as equally liable as the company.

Section 550 of the FW Act therefore, may provide an enforcement option to be considered

as a PPL investigation outcome in scenarios where it can be established a paymaster has inany way by act or omission, directly or indirectly, knowingly concerned or been party to a

contravention of the FW Act.

In considering enforcement options the FWO must turn its mind to its litigation policy 15. A

key consideration in undertaking litigation enforcement is public interest. Public interest

14 Fair Work Act 2009 Section 550

15Fair Work Ombudsmans Litigation Policy Guidance Note One



includes the challenge to ensure public value the most appropriate expenditure of tax

payer dollars. In consideration of a Section 550 litigation in a PPL investigation is applicable,

where liquidation has occurred, there is a strong public interest case to be made for general

and specific deterrence. In a scenario where it can be proven a paymaster has obtained

parental leave payments from Centrelink with a prior knowledge that it was intending to

enter into a liquidation scenario, or a paymasters history reveals evidence of pheonixing thepublic interest argument is further enhanced.

It should be noted the PPL Act requires the an employer determination be made subject to

[ m]atters relevant to whether an employer is a fit and proper person 16. These

requirements include consideration of whether an employer is insolvent. Thus, the above

scenario should only present itself where an employer becomes insolvent post an employer

determination by Centrelink.

3. The interaction of the keeping in touch provisions of the PPL Act and an employers

compliance obligations with the usual employment entitlements that are attracted to

keeping in touch days, in comparison with the PPL time which attracts no usual employment

entitlements.

Paid Parental Leave must be taken as a continuous block of time and, with certain

exceptions, work must not be undertaken in this time. A person is taken to have returned to

work, and therefore no longer entitled to Parental Leave Payments, when they perform one

hour or more of paid work other than for permissible purposes17.

During the course of the Paid Parental Leave period entitlements commonly seen with other

leave are not attracted to this period of time. For example, Paid Parental Leave time is not

counted toward service and does not accrue annual or personal leave or superannuation

entitlements.

One circumstance in which a parental leave payment recipient can return to their workplace

without breaking the continuum of parental leave is during a keeping in touch day 18

(KIT). A

KIT is a cornerstone of the public policy underpinning the PPL Scheme. It ensures a parental

leave recipient is encouraged to maintain contact and connection with their workplace

through exempting any KIT days from a return to work declaration. Consequently, any paid

work performed on a KIT day for the purpose of maintaining engagement to facilitate a

return to the employment at the cessation of the leave period will not attract the

determination of returning to work. A parental leave recipient is entitled to ten KIT days

during the course of the eighteen week parental leave period. It should be noted that until

amendments are made to the FW Act there is a possibility a KIT day will break an employees

continuous period of leave under the NES unpaid parental leave entitlement.

16 Paid Parental Leave Act 2010 Section 101(5)





The entitlements attached to a KIT day are identical to those attached to a recipients

normal working day19. For example the KIT days attract superannuation, annual leave and

personal leave accruals. Additionally, the KIT days attract all the normal pay entitlements.

An allegation referred to the FWO for investigation in regard to a KIT day is not identified as

a referral in accordance with Section 143 of the PPL Act, it does not relate directly to

obligations on paymasters in regard to payments or unauthorised deductions of the PaidParental Leave entitlement.

A FWO investigation may be undertaken in relation to a KIT day where an employee alleges

they have not been paid for the work undertaken on a KIT day or have not received their full

payment entitlement for this day, for example, allegations of underpayment of hourly rate,

or have not accrued entitlements such as annual or personal leave during a KIT day(s).

Allegations such as these are treated as possible contraventions under the FW Act.

In a situation where an employee in the usual course of their work receives above award

payments, the FWO (in most instances) has the jurisdiction to enforce only the minimum

entitlement in accord with the applicable industrial instrument(s). Therefore, where an

employee receives their statutory entitlement for work undertaken on a KIT day the FWO

would be unlikely to be able to enforce any above award payment.

However, as an example, where it can be established that a contravention has occurred in

regard to a National Employment Standard a FWI may apply to the Court20 to enforce the

safety net contractual obligations of an employer, which may attract the jurisdiction of

above award payments. Therefore, where a paymaster is identified as contravening an

entitlement such as annual leave, the FWO may be able to seek enforcement of above

award payment on a KIT day in line with an agreement/common law contract between the

parties.

4. Investigating deductions in situations where monetary disputes between an employer and

employee have not been settled prior to the commencement of PPL, possibly where an

employer seeks to independently enforce the disputed amount through a reduction to an

employees Parental Leave Payment entitlement .

There are limited situations in which deductions can be made to Parental Leave Pay

instalments by a paymaster. These include deductions authorised by the payment recipient

that are principally for the recipients benefit (such as salary sacrifice), deductions for PAYG

and deductions relating to child support21. In situations where a paymaster is referred to the

FWO in accord with Section 143 of the PPL Act the FWO will investigate the allegations of

unauthorised deductions.

FW Act investigations undertaken by the FWO include situations where an employer has

made unauthorised deductions such as an employer belief money is owed for uniforms,

19http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-

scheme/parents---frequently-asked-questions/other-employer-provided-entitlements.php20

As per 14 Section 54121

As per 7 Sections 67-69



alleged damage to property, training, alleged theft and under or poor performance. In

accord with the FW Act a deduction may be made by an employer from an amount payable

to an employee under permitted deductions only22. Therefore, based on investigative

experience the FWO envisages the referral of matters in scenarios where a paymaster has

determined there is an unresolved monetary dispute between the parties and the

paymaster believes a monetary entitlement is owed by the Parental Leave Pay recipient.

In addition, it is envisaged there will be situations referred from Centrelink to FWO for

investigation where a paymaster has made unauthorised deductions in lieu of an additional

leave entitlement. For example, where an employer based paid maternity leave scheme is

in place and the employer paymaster makes a decision to deduct payments made to an

employee under this scheme from an employees Paid Parental Leave entitlement.

A similar scenario may occur where an employee has accessed annual or long service leave

entitlements during the course of the Paid Parental Leave period and rather than correctly

pass on the Parental Leave Payment entitlement an employer paymaster deducts the annual

or long service leave payment from the Parent Leave Payment instalment(s).

The PPL Act is clear in regard to allowance and authorised deductions and consequently in

all of the above scenarios the FWO will investigate these referrals as unauthorised

deductions and view them as prima facie contraventions of the PPL Act.

Conclusion

The Productivity Commission Inquiry Report (2009)23 found approximately half of all women in the

workforce did not have access to a paid parental leave scheme. The submissions to the inquiry from

stakeholder and interest groups identified many common themes and proposed objectives thatlegislation regarding paid parental leave should seek to enshrine, such as:

o Improved health and wellbeing of the mother and baby;

o The value of care and the important impact it has on a childs development;

o Maintaining a womans longer term attachment to the workforce;

o Womens increased participation in the workforce; and

o Gender equity within the workforce and increased retention of the female labour

force.

A referral by Centrelink to the FWO for alleged contraventions of the PPL Act by a paymaster

arguably does not indicate the presence of a successful future ongoing relationship between theparties (employer and employee). It is imperative that Centrelink ensure employer determinations

involving questions of employment status and Paid Parent Leave eligibility are subject to an

administrative process for the independent reassessment of determinations. This will contribute

greatly to appropriate referrals to the FWO.


23Paid Parent Leave: Support for Parents with Newborn Children. No. 47, 28 February 2009 @ 1.5



The FWOs role in ensuring compliance with the PPL Act is to investigate alleged non compliance by

paymasters (employers). The FWOs role is not one of reviewing determinations made by Centrelink

in regard to a paymasters obligations and disputes regarding employment relationships between

the employer and employee and the disputed employment status of Parental Leave Payment

recipients.

While the FWO has a role in the provision of information to employers and employees in regard to

their rights and obligations to unpaid parental leave under the National Employment Standards, the

FWOs role is to test eligibi lity with the interaction of the FW Act. As identified in the course of this

paper, a recipients entitlement to parental leave payments through an employer determination

made by Centrelink does not automatically enliven the recipients entitlement to the rights

regarding unpaid parental leave under the National Employment Standards.

The issue of employer determinations is one that is subject to the PPL Act and Centrelink processes

and as such does not currently present a scenario to be addressed through the FWO investigation

process. However, the investigation scenarios outlined in this paper are firmly within the FWO

jurisdiction. Investigations undertaken by the FWO will provide a source of data for review and

analysis of matters undertaken in the realm of Section 143 referrals and will provide an information

source as to whether the investigation referrals, processes and actions align with the public policy

aims of the Paid Parental Leave Scheme.

Carey Trundle

Director Regional Services & Targeting SA/NT

Fair Work Ombudsman

[email protected]

(08) 8225 8261

Carey Trundle (2) 150811

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