Commonwealth of Australia Explanatory Memoranda

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LONG SERVICE LEAVE (COMMONWEALTH EMPLOYEES) AMENDMENT BILL 2006

                               2004-2005-2006



     THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA



                      HOUSE OF REPRESENTATIVES




      LONG SERVICE LEAVE (COMMONWEALTH EMPLOYEES)
                    AMENDMENT BILL 2006



                     EXPLANATORY MEMORANDUM




(Circulated by authority of the Minister for Employment and Workplace Relations,
                       the Honourable Kevin Andrews MP)
Outline



               LONG SERVICE LEAVE (COMMONWEALTH EMPLOYEES)
                             AMENDMENT BILL 2006


OUTLINE

The purpose of the Bill is to extend the operation of the Long Service Leave (Commonwealth
Employees) Act 1976 (the LSL Act) in respect of Telstra employees for a period of three years
after the designated day - that is, the day on which the Commonwealth ceases to have a
controlling interest in Telstra.

Employees of Telstra currently accrue long service leave entitlements under the LSL Act.

The Telstra (Transition to Full Private Ownership) Act 2005 (the Transition Act):

    ·     presently ensures that from the designated day Telstra employees will not continue to
          accrue benefits under the LSL Act; and
    ·     includes savings provisions for Telstra employee long service leave entitlements accrued
          up to the designated day.

The savings provisions - which commence on the designated day and will be located in
Division 1 of Part 3A of the Telstra Corporation Act 1991 (the Telstra Act) - protect
entitlements accrued under the LSL Act before the designated day, generally by those employees
with at least 10 years service before the designated day. However, to ensure equity, these
provisions also provide that employees with less than 10 years service at the designated day
receive benefits commensurate with the LSL Act standard when they either complete 10 years
service with Telstra or cease to be employees in circumstances under which the LSL Act
entitlements would have applied but for the sale.

The proposed amendments to the LSL Act would defer the operation of the substantive and
savings provisions for a period of three years after the designated day.


FINANCIAL IMPACT STATEMENT

The proposed measures are budget-neutral.




House of Representatives                                                                     page 1
                                                          Long Service Leave (Commonwealth Employees)
                                                                                  Amendment Bill 2006
Notes on clauses



NOTES ON CLAUSES

Clause 1 - Short title

This is a formal provision specifying the short title of the Act.

Clause 2 - Commencement

This clause provides that the Act will come into operation on the day after it receives Royal
Assent.

Clause 3 - Schedule(s)

This clause provides that an Act that is specified in a Schedule is amended or repealed as set out
in that Schedule. The Schedule contains amendments to the Long Service Leave
(Commonwealth Employees) Act 1976.




House of Representatives                                                                      page 2
                                                           Long Service Leave (Commonwealth Employees)
                                                                                   Amendment Bill 2006
Notes on clauses




                               SCHEDULE 1 - AMENDMENTS

                     Long Service Leave (Commonwealth Employees) Act 1976

Item 1 - New section 25A

This item inserts a new section 25A into the Long Service Leave (Commonwealth Employees)
Act 1976 (the LSL Act). New section 25A provides that an Act that is specified in Schedule 1 is
amended as set out in the applicable items in that Schedule. The Schedule contains amendments
to the Telstra (Transition to Full Private Ownership) Act 2005 (the Transition Act).

Item 2 - Schedule 1 - Amendments - Telstra (Transition to Full Private Ownership) Act
2005

This item inserts a new Schedule 1 into the LSL Act which makes a number of technical
amendments to the provisions in the Transition Act dealing with the long service entitlements of
Telstra employees following the privatisation of Telstra.

The Transition Act amends:
    · the Long Service Leave (Commonwealth Employees) Regulations 1957 to ensure that
       Telstra employees will not continue to accrue benefits under the LSL Act; and
    · the Telstra Corporation Act 1991 (the Telstra Act) to include savings provisions for
       accrued Telstra employee long service leave entitlements (Division 1 of Part 3A).

These amendments are expressed to commence on the designated day - that is, the day on which
the Commonwealth ceases to have a controlling interest in Telstra (hereafter referred to as `the
date of sale').

The amendments made by new Schedule 1 to the LSL Act will defer the commencement and the
operation of the Transition Act amendments by a period of three years from the designated day.

The effect of these amendments is to:
    · ensure that employees of Telstra will continue to accrue benefits under the LSL Act for a
        period of three years after Telstra is privatised; and
    · defer the operation of the transitional provisions contained in Division 1 of Part 3A of
        the Telstra Act by a similar period.

Itemised Amendments to Transition Act

Item 1

This item provides for the extended operation of the LSL Act for Telstra employees without
affecting other transition arrangements.

Item 2

The Transition Act is to be amended to provide that references to the LSL Act generally affect
the operation of that Act for a period three years from the date of sale.

House of Representatives                                                                   page 3
                                                        Long Service Leave (Commonwealth Employees)
                                                                                Amendment Bill 2006
Notes on clauses




Items 3-5

Item 64 of Schedule 1 to the Transition Act provides for the inclusion of a new definition of
"combined service period" in new Part 3A of the Telstra Act. "Combined service period"
presently is defined as service up to the date of sale and any continuous period of engagement
with a Telstra body from that date. These are consequential changes to reflect the intention that
eligible employees will continue to receive entitlements under the LSL Act for a period of three
years after the date of sale. The proposed changes provide that the third anniversary of the date
of sale, and not the date of sale itself, is the critical date for determining whether service has
been continuous pre and post sale.

Items 6-10

Item 64 of Schedule 1 to the Transition Act inserts section 9B in new Part 3A of the Telstra Act.
Section 9B provides a mechanism for allowing a Telstra body post sale to grant long service
leave rights to Telstra employees who were engaged by Telstra immediately before the date of
sale but who had less than 10 years service. The proposed changes will extend this entitlement
to employees who were engaged by Telstra immediately before three years had elapsed from the
date of sale but who have less than 10 years service at that time.

Items 11-13

Item 64 of Schedule 1 to the Transition Act inserts section 9C in new Part 3A of the Telstra Act.
Section 9C provides that in certain circumstances Telstra must pay out the long service leave
entitlements of former Telstra employees. Employees covered by this provision are those who
were employed by Telstra immediately before the date of sale who had worked for Telstra for
less than 10 years. Where such an employee ceases to be an employee after that date but has a
combined service period pre and post sale of more than 10 years their long service leave may be
paid out. The proposed changes provide that the third anniversary of the date of sale, rather than
the date of sale itself, is the critical day for determining entitlements under section 9C.

Items 14-17

Item 64 of Schedule 1 to the Transition Act inserts section 9D in new Part 3A of the Telstra Act.
Section 9D applies to employees who were employed by Telstra immediately before the date of
sale but who have less than 10 years service on that date. Where such an employee who
continued to be employed by a Telstra body after the date of sale dies, a payment equivalent to
that available on separation under section 9C is payable. The proposed changes provide that the
third anniversary of the date of sale, rather than the date of sale itself, is the critical day for
determining entitlements under section 9D.

Item 18

Item 64 of Schedule 1 to the Transition Act inserts section 9E in new Part 3A of the Telstra Act.
The proposed change extends the period that the LSL Act provisions operate to three years after
the date of sale in relation to eligible employees who are retrenched.




House of Representatives                                                                    page 4
                                                         Long Service Leave (Commonwealth Employees)
                                                                                 Amendment Bill 2006
Notes on clauses




Items 19-21

Item 64 of Schedule 1 to the Transition Act inserts section 9G in new Part 3A of the Telstra Act.
This provision inserts a savings provision in the principal Act to protect the long service leave
entitlements of eligible Telstra employees with at least 10 years service immediately before the
date of sale. The proposed amendment to section 9G makes the third anniversary of the date of
sale the critical date for the purposes of the savings provision.




House of Representatives                                                                   page 5
                                                        Long Service Leave (Commonwealth Employees)
                                                                                Amendment Bill 2006