6 minute read
The Coal Mining Long Service Leave Scheme – time for change
from BBMC Yearbook 2021
by bbminingclub
Stephen Smith, Head of National Workplace Relations Policy, Australian Industry Group
The Coal Mining Industry Long Service Leave (LSL) Scheme is the oldest portable long service leave scheme in Australia. It was introduced more than 70 years ago and plays an important role in providing long service leave entitlements to employees in the black coal mining industry. The scheme is funded by a 2% levy on the ‘eligible wages’ of ‘eligible employees’.
For companies that mine black coal, the scheme causes few issues. The definition of an ‘eligible employee’ can be readily applied. However, for contractors to coal mining industry customers, there are major uncertainties about the coverage of the scheme, leading to major cost risks associated with back-pay claims for the levy.
The scheme provides entitlements to ‘employees in the black coal mining industry’, but what does that mean given the numerous High Court, Federal Court and tribunal decisions over the years that have interpreted the phrase ‘employee in the coal mining industry’ in conflicting ways?
Prior to the beginning of 2010, employers were covered by the Coal Mining LSL Scheme if they were specifically named in a coal mining industry award or if they were a party to an enterprise agreement that incorporated the scheme. This provided certainty about the employers and employees who were covered.
However, in late 2009 legislative changes were rushed through Parliament in a few days without any consultation with the Australian Industry Group or other representatives of businesses in the metal, vehicle, electrical and other industries, which provide services to coal mining customers but were never covered by the Coal LSL Scheme or coal industry awards. The legislative changes resulted in the coverage of the scheme being moved into legislation from 1 January 2010.
In a rushed and inadequate attempt to provide some detail on what types of employees are in and out of the scheme, the coverage definitions in the legislation refer to the coverage clause in the Black Coal Mining Industry Award 2010. This approach was adopted even though at that time the coverage provisions in the Black Coal Award were not settled and the draft coverage provisions were strongly criticised by a Full Bench of the Australian Industrial Relations Commission (now the Fair Work Commission).
The Full Bench said “we are concerned that the clause as drafted is not simple to understand nor easy to apply. In particular, contractors who perform some work at or about coal mines may have difficulty in determining whether the award covers them”.
The definition of ‘black coal mining industry’ in the Award includes the ridiculous wording that “black coal mining industry has the meaning applied by the courts and industrial tribunals”. A recent judgment of Justice White of the Federal Court included the polite understatement that these words are “not altogether helpful”. His Honour said that the words imply that a single meaning of the term has been recognised in decisions of courts and tribunals but this is not the case.
The current unsatisfactory situation cannot be allowed to continue. The vague coverage provisions are unfair on employers, employees and the Coal Mining Industry (Long Service Leave Funding) Corporation (Coal LSL) which is responsible for enforcing the provisions.
Beyond the coverage problems, another major difficulty relates to the interaction between State LSL laws and the Coal Mining LSL Scheme. Many employees of contracting businesses providing services to coal mining industry customers in the Bowen Basin receive entitlements under the Queensland State LSL legislation. If these businesses are ultimately held to be covered by the Coal Mining LSL Scheme, they will be required to pay the 2% levy but have no way of recouping the LSL entitlements already paid to their current and former employees.
Also, the employees will be able to ‘double dip’ on LSL entitlements. A further problem relates to the limitation on how far back claims for payment of the 2% levy can be made. Every other portable long service leave scheme in Australia includes a limitation of no more than six years on back-pay claims for the relevant levy.
There is no certainty about whether such a limitation applies under the Coal LSL Scheme. The issue is tied up in complex legal arguments about the interaction between certain Federal and State laws. There are sound public policy reasons for limiting back-pay claims.
As the High Court has noted, for 400 years the policy of the law has been to fix definite time limits for prosecuting civil claims, driven by the perception that where there is delay the whole quality of justice disappears.
It is in no-one’s interests for businesses – small and large – to be crippled by financial claims going back more than a decade given the high level of uncertainty that exists about the coverage of the Coal LSL Scheme. Hopefully, we will soon see legislative changes clarifying the coverage of the scheme and addressing the other major problems.
The Federal Government has commissioned an independent review by KPMG Law into the scheme. The review is scheduled to be completed by the end of 2021, with a report and recommendations to be provided to the Government by that time. In a June 2021 media release announcing the review, Attorney General and Industrial Relations Minister, Michaelia Cash, said: “The coal industry’s operating environment continues to evolve, and the laws currently regulating the scheme are not serving employees or employers as they should. More than 128,000 employees are accruing or have accrued long service leave through the scheme, and Coal LSL has in excess of $1.9 billion in funds under management.
This review is critical in ensuring the scheme, and the corporation that manages the scheme, is a model for the highest standards of governance of worker entitlements with appropriate and robust safeguards in place.”
With an election due by May 2022, there may not be time for legislation to be introduced and passed before the election. Hopefully whichever party wins Government at the next election will see the merit in addressing the current untenable situation which is unfair on both employers and employees.
The Coal LSL Scheme has a long and proud history which has unfortunately been marred by rushed legislative changes. The scheme should not be allowed to continue to fall into disrepute by any further delays in having these obvious problems addressed.
