The Federal Government has released an exposure draft of a new Bill on taxation and superannuation guarantee integrity measures. The Bill requires all employers to implement Single Touch Payroll (“STP”) reporting, grants the Australian Taxation Office (“ATO”) stronger enforcement powers, and sets out when new offences may have been committed.
Currently the STP reporting framework comes into effect from 1 July 2018 for entities with 20 or more employees. The STP is intended to facilitate the ATO in detecting, monitoring, and preventing the non-payment of superannuation. The technology enables and requires employers to provide the ATO with real-time reporting of superannuation and payroll information, such as withholding payments, employee wages, and superannuation contributions.
The Bill introduces additional reporting requirements, and will extend the STP rules to all employers from 1 July 2019. This will provide the ATO with greater visibility and address the “significant proportion” of superannuation guarantee non-compliance attributable to small businesses. This was one of the recommendations of industry and government reports in 2016 and 2017. The reports called for additional resources and powers for the ATO to ensure employer compliance with superannuation guarantee obligations and to recover unpaid entitlements.
New enforcement and compliance measures
The Bill gives the Commissioner of Taxation the ability to direct an employer to:
- pay unpaid and overdue superannuation guarantee charge liabilities;
- undertake educational courses relating to superannuation guarantee obligations; and
- provide a court ordered security deposit for the payment of existing or future tax related liability.
The Bill also allows the Commissioner to disclose a current or former employer’s suspected non-compliance to an affected party.
With some exceptions, the Bill creates offences for the failure to comply with the directions set out above.
Notably, an employer is not exempt from administrative penalties and/or criminal liability even if it took all reasonable steps to comply with the direction to pay, if the employer cannot establish that all reasonable steps were also taken to discharge the liability before the direction was made.
Before issuing a direction to pay, the Commissioner of Taxation must consider the employer’s history of compliance with taxation laws, the steps the employer has taken to discharge or dispute the unpaid liability, and whether the amount is substantial, having regard to the size and nature of the business.
Key takeaways if the Bill is enacted
Roseanna Smith, Graduate Associate
The Fair Work Commission (“FWC”) has held that a lockout constituted an “excluded period” of service under the Fair Work Act 2009 (Cth) (“FW Act”), and consequently that the employees affected by such action did not accrue annual leave or long service leave during this period.
What is an “excluded period”?
The FW Act provides that a period of service is a period during which the employee is employed by the employer, but does not include an “excluded period”.
An excluded period is defined to include any period of unauthorised absence or any period of unpaid leave or unpaid authorised absence (other than certain specified categories).
When calculating leave entitlements, an excluded period will not be included in a period of service, although it does not break the employee’s continuous service.
In April 2017, after a year of enterprise agreement negotiations, an employer locked out its employees in response to notified industrial action that was to take the form of work bans and four-hour stoppages. A dispute then arose as to whether the lockout constituted an “excluded period”.
The FWC decided that a lockout was an unpaid authorised absence, as it was an absence “that is endowed with authority or approval” by the employer. The FWC determined that it did not matter whether the employees who were absent “agreed or wished to be absent”; what is relevant is that the absence was authorised by the employer.
The FWC was of the view that because the FW Act expressly deals with the situation where employees are stood down as being included in a period of service, it considered that the legislature had turned its mind to the issue. Hence, if a lockout period was meant to be included for the purpose of calculating leave entitlements the legislature would have expressly included that within the FW Act provisions.
Long Service Leave
Both the relevant Modern Award provisions and the relevant state long service leave legislation (Long Service Leave Act 1992 (Vic) (“LSL Act”)), referred respectively to an “unbroken contract of employment” and “continuous employment”. The Modern Award and the LSL Act provided for exclusions when calculating long service leave, including “service interruptions”, such as industrial disputes. The Commission agreed with the employer that the ordinary meaning of industrial dispute included disputes arising from enterprise agreements and lockouts. Consequently, during the period of the lockout the accrual of long service leave was effectively paused.
The decision is significant because it highlights that the consequences of industrial action can extend to employee entitlements. It remains to be seen whether the decision will discourage industrial action by employees.