Member update workplace

MEMBER UPDATE

• SUPERANNUATION

• WORKPLACE RELATIONS

• WORKERS’ COMPENSATION AND

WORK HEALTH AND SAFETY

HOW THEY HAVE MOVED

60.0

70.0

80.0

90.0

100.0

110.0

120.0

-Jun-02 -Jun-03 -Jun-04 -Jun-05 -Jun-06 -Jun-07 -Jun-08 -Jun-09 -Jun-10 -Jun-11

Superannuation

Hourly rates

Workers' compensation

Payroll tax

AL/PH Leave

SUPERANNUATION

SUPERANNUATION – BIG BUSINESS

20000

40000

60000

80000

100000

120000

140000

160000

180000

Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

Employer Contribution ($M)

Assets($10M)

SUPERANNUATION – BIG DISCONNECT

5000.0

10000.0

15000.0

20000.0

25000.0

30000.0

35000.0

Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

Number of Accounts (‘000)

Persons in labour force (‘000)

COOPER REVIEW

• Looked at ways to better safeguard retirement savings and

reduce cost.

• Designed super around members, not funds

• High level of disengagement

• Choice of fund had not delivered cost reductions

• Fees too high, services not used

• Too much tinkering

• Insufficient transparency

• Cannot compare funds

• Cannot see costs

SUPERANNUATION – CHANGING FOR EMPLOYERS

• 5 key areas of change affecting employers

• Increase to superannuation guarantee levy

• Pay slip reporting

• MySuper

• SuperStream

• TFN‟s

INCREASE TO SUPERANNUATION GUARANTEE

LEVY – BETTER RETIREMENT INCOME FOR THE

YOUNG

• From 1 July 2013

• 9% OTE superannuation guarantee levy increases to 9.25%

• Age limit of 70 removed

• Introduced as part of MRRT

• Should offset in bargaining (not offset in annual wage review)

• Proposed company tax reduction (not tax offset for

unincorporated businesses)

PROPOSED SG INCREASES

YEAR STARTING INCREASE(%) SG LEVY (%)

July 2012 - 9.0

July 2013 0.25 9.25

July 2014 0.25 9.5

July 2015 0.5 10.0

July 2016 0.5 10.5

July 2017 0.5 11.0

July 2018 0.5 11.5

July 2019 0.5 12.0

INCREASES TO SG LEVY

Employers should

• Be aware of increase

• Think about employees whose remuneration inclusive of

superannuation

• Think about salary sacrifice and employee contributions

PAY SLIP REPORTING – MORE INFORMATION TO

EMPLOYEES ABOUT THEIR SUPER

• Employers currently report contributions accrued or

contributions made on pay slips

• From 1 July 2012/January 2013/(?) employers to report

• Contributions accrued + (possibly) expected contribution date

or

• Contributions made

• From 1 July 2013,

• Employers to report contributions made

• Funds to

• Report contribution made/not made each quarter, or

• Issue member statement each 6 months

PAY SLIP REPORTING – GETTING MORE

INFORMATION TO EMPLOYEES ABOUT THEIR

SUPER (Cont’d):

When the new requirement is determined employers should

• Expect information about the new obligation

• Be aware of changed reporting requirements

• Talk to payroll/software provider/IT to understand

impact/upgrade, or advise person issuing manual pay slips.

MYSUPER – THE NEW DEFAULT

• Simpler, more member protected superannuation for those employees

who don‟t choose a fund

• From 1 October 2013 employers‟ default contributions into MySuper fund.

• For employers, “default” fund contribution is a contribution where

• Employee does not have a “chosen” fund

• The fund is not prescribed by an agreement

• Contribution not “made” into defined benefit fund

• Agreements approved from 1 October 2013 will have to prescribe

MySuper fund

MYSUPER – THE NEW DEFAULT (Cont’d)

• From 1 July 2013 funds authorised to offer MySuper will be

known

• Modern awards will be varied to reflect MySuper requirements

• Transitional arrangements for some large employer funds

• Current agreements continue

• Most employers should experience no change (current default will

be MySuper compliant)

• Some employers will need to change default after 1 July 2013 to

meet 1 October requirement

• Select new default

• Issue new standard choice form

• Enroll non-choice employees

MYSUPER – THE NEW DEFAULT (Cont’d)

Leading up to 1 July 2013, employers should expect

• Further information about this, especially from default fund(s),

ATO and NSWBC

• Employee questions – send to fund

• Fund amalgamations

If in doubt from 1 July 2013, employers should confirm that existing

defaults are MySuper compliant

• Check with current default fund(s)

• Check APRA website

• Ask NSWBC

SUPERSTREAM – SUPERANNUATION GOES INTO

THE E-COMMERCE WORLD

• Compulsory system wide standardised electronic

communication and transaction system. All funds will be

required accept

• Standard electronic information about new members,

contributions and transfers

• Electronic contributions

• From 1 July 2013 funds to use SuperStream for inter-fund

transactions (such as rollovers)

• From 1 July 2014 funds to use SuperStream for employer - fund

transactions (enrolments, contributions data, contributions)

• Funds will be testing and building up in 1st half of 2013

SUPERSTREAM – E-COMMERCE SUPER COMES

TO EMPLOYERS

Employers


• Medium large employers (20+ employees) employer - fund

transactions (enrolments, contributions data, contributions) to

be SuperStream compliant


• Small employers (<20) (subject to further consultation) to be

SuperStream compliant

• SuperStream compliant means the fund receives and sends

information, money in standard format.

SUPERSTREAM – E-COMMERCE SUPER COMES

TO EMPLOYERS (Cont’d):

Employers should expect

• Further information about SuperStream from payroll/clearing

house suppliers, their funds, ATO and NSWBC

• Upgrades to payroll/employee records systems

• Set-up with fund or clearing house

If in doubt (by early-mid 2013) employers should

• be seeking information from supplier payroll/clearing house,

software provider, or default fund

• not overlook unusual funds, such as SMSFs.

TAX FILE NUMBERS – MORE IMPORTANT AND

ALLOWING MORE TRACING, POLICING

• Employers required to pass employee TFN to fund by the later

of

• 14 days after the employee gives TFN

• The contribution after the employee has given TFN

• TFN pass-on employer responsibility, not clearing house/agent

responsibility

• For employees

• No-TFN contributions attract 31.5% additional tax

• Members without TFNs cannot make employee contributions,

receive co-contributions

• Employees will notice non-pass on


ALLOWING MORE TRACING, POLICING (Cont’d):

• TFNs used to

• Assess contribution cap compliance

• Support finding lost members and account consolidation

• 1 Jan 2012 funds can identify member accounts in other funds

• 1 July 2012 funds can consolidate members‟ multiple in-fund

accounts

• 1 July 2013 funds to send no-TFN contributions to ATO after 6

months

• 1 Jan 2014 auto-consolidation of amounts < $1,000

• 1 July 2014 ATO TFN validation service for employers

• In future TFNs will help identify tax payers not getting

superannuation contributions


ALLOWING MORE TRACING, POLICING (Cont’d):

• Employers should

• Check they have passed on employee TFN to fund where

employee TFN returned declaration form

• Expect greater policing of TFN pass-on

• Expect greater automation of TFN declaration and pass-on

• Growing employee awareness of no-TFN implication

• Employees will retain the right to not declare TFN or

authorise its pass-on

SUPER TIMING SUMMARY

Time Line 01/07/

2011

01/01/

2012

01/07/

2012

01/01/

2013

01/07/

2013

01/01

/2014

01/07/

2014

01/01/

2015

01/07/

2015

Payslip

reporting

Possible

“payment by”

date reporting

on pay slips.

Super Seeker to

show active

accounts, ATO

held money.

Contribution

"date paid"

reporting on

pay slips. Funds

advise members

about

contributions

received.

Superseeker

show new &

inactive

account low

income

contributions

My Super

From 1 October

default

contributions to

My Super,

default funds to

be My Super

compliant.

Super

Stream

(1st half of

2012)

SuperStream

data

standards

to be

released

Transactions

between

funds to be

Super Stream

compliant

Information and

payment

transactions

from

employers with

20+ employees

to be Super

Stream

compliant

Information

and payment

transactions

from

employers with

< 20 employees

to be Super

Stream

compliant

TFNs

Funds

can use TFNs

as primary

locator

Funds can use

TFNs to

seek other

accounts

and contact

other funds.

Funds can

consolidate

multiple

accounts

within

the fund.

Funds to

forward no-TFN

contributions to

ATO after 6

months and

report inactive

accounts. TFN

validation

service for

funds.

Funds

can auto-

consolidate

balances

under

$1,000

between funds.

(Late 2014)

possible auto-

consolidation

of balances

under $10,000.New

emp. to consider

consolidation,

choice on TFN form.

TFN validation

service available to

employers

REVIEWING THE FAIR WORK ACT,

MODERN AWARDS AND AWARD

WAGES

BACKGROUND TO THE REVIEWS – FAIR WORK

ACT

• No OBPR assessment of fair work legislation

• Post-implementation review required after year of operation

• Process

• Background paper issued 18 January

• Submissions by 17 February (200+ submissions)

• Responses by 2 March (30+ submissions)

• Panel conducted consultations

• Report due to the Minister by 31 May with OBPR assessment

BACKGROUND TO THE REVIEWS – MODERN

AWARDS

• Required by transitional legislation

• FWA must consider whether modern awards

• Achieve the modern awards objective

• Operate without anomalies or technical problems arising from

modernisation

BACK GROUND TO THE REVIEWS – MODERN

AWARDS (Cont’d)

• Process

• Applications to vary (280+ applications)

• Yet to be listed

• Some matters of general application may go to full bench

• penalty rates

• apprentices, trainees + junior rates

• Award flexibility

• Annual leave

• Public holidays

• Remainder of applications likely to be single member

FAIR WORK ACT REVIEW

Members Report

• Too much time spent to understand and achieve

compliance

• Act based on wrong presumptions

• departures from Mon-Fri full time undesirable

• adversarial relations, does not allow for, foster

collaborative relations

Key areas raised in employer submissions were

• Dismissals and employee protections

• Inflexibility and increased employment costs

• Bargaining and agreement making

• Aspects of the National Employment Standards

• Union rights

UNFAIR DISMISSAL – GROWING NUMBERS

2500

2700

2900

3100

3300

3500

3700

Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

Application for ufd remedy

Number settled without a decision Number finalised by FWA

Unfair dismissal - No of applications and their fate - quarterly

UNFAIR DISMISSAL – PROCESS AND COSTS

• Problems

• Go away money

• Costs and difficulty in disciplining and terminating

• Costs and difficulty in defending

• Procedural fairness and personal harshness

• Proposals

• Small business exemption

• Greater onus on employee to demonstrate unfairness

• Higher fees, penalties for frivolous claims and costs where

application dismissed

GENERAL PROTECTIONS – FAST GROWING

NUMBERS

0

100

200

300

400

500

600

Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

Applications - dismissal [s365]

Applications - no dismissal [s372]

GENERAL PROTECTIONS – COSTS, CONFUSION

AND MANAGEMENT THREAT

• Problems

• Difficult to apply with certainty

• Costs, cause inhibition in disciplining, terminating

• Reverse onus, “a reason”, objective test

• 60 days, 6 years to lodge

• Proposals

• Remove “adverse action” or “workplace rights”

• Remove reverse onus, require a substantial reason

• Timeframe for application same as unfair dismissal

FLEXIBILITY – DIFFICULT TO STAFF TO NEED

• Flexibility – not many avenues

• Numbers of individual flexibility agreements (IFAs) unknown

• Numbers of flexible working arrangements (FWAs) unknown

• Problems - IFAs

• Uncertainty – Operation of BOOT

• Can‟t be offered as term of employment

• Can only alter a narrow range of award terms

• Can be unilaterally terminated with 4 weeks‟ notice

FLEXIBILITY – DIFFICULT TO STAFF TO NEED

(Cont):

• Problems – FWAs

• Managing employee expectations

• Employee understanding there is a “right” to flexibility

• Flexible arrangements set precedents

• Proposals

• Make IFAs more certain:

• Clarify non–monetary benefits for BOOT

• Registration

• Extend unilateral termination time

• Expand award/agreement terms which can be addressed

WHAT CAN EMPLOYERS EXPECT?

• Report release: Govt. response to review in June/July

• Can expect at best modest proposals for change

• Other lobbying might be important

• Where might the government move?

• Flexibility

• General protections

• Agreement making

• Where is the government most likely to move?

• It may rename Fair Work Australia

REVIEW OF MODERN AWARDS

• ABI applied to vary 25 different modern awards

• P/T additional hours

• Annual leave paid in normal cycle

• Allow employer to direct excess A/L cash-out

• Restaurants - penalties small business wage, caterer's

coverage

• Major application in Restaurants award

• Penalties

• Small business wage rate

• Caterers‟ coverage

REVIEW OF MODERN AWARD (Cont’d)

• Several applications with general effect

• Use of IFA provisions for cashing out A/L

• Training

• Payments to trainees when training

• Increased apprentice rates

• 1st year to 60%

• Adult lowest award classification

• Federal government application to facilitate competency

based-progression

• Public holidays: non Monday-Friday (non-casual) employees

to get compensation when rostered off on PH

ANNUAL WAGE REVIEW DECISION - JUNE

• Awarded 2.9% increase to

• National Minimum wage (to $606.40 pw, $15.96ph)

• Special NMW for trainees, apprentices

• Special NMW for employees with disability ($606.40 pw no

disability impact; minimum where there is an impact not yet

moved)

• Default casual loading from 22% to 23%

• Modern award wages

ANNUAL WAGE REVIEW DECISION – JUNE (Cont’d)

• For awards from 1st pay period starting on or after 1 July

• Classification rate increase

• Next phase-in step (wages +/- 40% transitional amounts)

• Next penalty, loading phase-in step (MA penalty, loading

+/- 40% transitional percentage)

• Work-related allowances increase by 2.9%

• Reimbursement allowances increase by CPI component

• For agreements

• Minimum award wage (MA classification rate or

transitional rate) is minimum for agreement

• Allowances, penalties, loadings as per agreement

WHATS HAPPENING

WHS & WORKERS

COMPENSATION

WHS HARMONISATION - SORT OF MAYBE SOME

DAY?

In - Commonwealth

- Queensland

- Northern Territory

- ACT

- NSW ( with changes)

Coming – but not until 2013 - Tasmania

Trying - South Australia

Never were in fully - WA

Changed our minds – Vic

COAG – Lets take another look in 2014

WORKER’S COMPENSATION

• Alignment v Harmonisation

• Less ambitious program

• 7 working groups

• Definitions

• Permanent incapacity

• Death benefits

• Return to work

• Self Insurers

• Multi state employers

• Dust Diseases

DON’T EXPECT TO SEE TOO MUCH BEFORE 2013

WHS – THE NSW PICTURE

WHS HARMONISATION –NSW

• WHS Act 2011 came into force 1/1 2012

• Conforms with Model Act except for the retention of union rights

to prosecute in very limited circumstances.

• Jurisdiction with the most to gain

• Best prepared of all jurisdictions

• Transition team moving back to BAU

• Focus on help not enforcement?

ENFORCEMENT ACTION BY WORKCOVER NSW

0

5,000

10,000

15,000

20,000

25,000

200

3-0

4

200

4-0

5

200

5-0

6

200

6-0

7

200

7-0

8

200

8-0

9

200

9-1

0

201

0-1

1

201

2

prohibition notices

improvement notices

infringement notices

IMPROVING SAFETY PERFORMANCE

8

9

10

11

12

13

14

15

16

baseperiod

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cla

ims p

er

1,0

00 w

ork

ers

Achieved Reduction required to meet target

10/5/5 – TOP 10 INDUSTRIES

• Site Preparation Services – Demolition

• Sheep and Beef Cattle Farming

• Other Wood Product Manufacturing - Wooden Structural

Component Manufacturing

• Road Freight Transport

• Building Structure Services – Concrete Construction Services

• Other Construction Services – Landscaping Services

• Non-Building Construction – Road and Bridge Construction

• Building Construction – House Construction

• Plastic Product Manufacturing

• Horticulture and Fruit Growing – Plant nurseries and grape

growing.

FOCUSING ON RISK - 10/5/5 – TOP 5 INJURIES &

ILLNESSES

• Manual handling

• Falls on same level

• Falls from heights

• Struck by falling or

moving object

• Striking moving or

stationery objects

• Mental disorders (including

stress);

• Nervous system and senses

diseases (including hearing

loss);

• Occupational cancers;

• Respiratory system

diseases; and

• Musculoskeletal system

diseases.

WORKERS

COMPENSATION – THE NSW

PICTURE

IT DOESN’T BALANCE

Assets $14,719 m

Liabilities $18,802 m

Deficit -$ 4,083 m

Funding ratio 78%

Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011

WHY DOESN’T IT BALANCE?

• Impact and flow on from GFC - reduced yields on investments -

50%

• Deteriorating claims management experience – 50%

WHAT THE ACTUARY SAYS ABOUT HOW TO FIX

THE PROBLEM

Increase premiums

and/or

Reduce benefits

and/or

Improve injury management

PREMIUM INCREASES

Within 5 years 28%

Within 10 years 10%

BUT

NSW already lags Victoria and Queensland so premium increases

will only exacerbate our competitive disadvantage and lead to jobs

losses. Vic premiums down another 3% from 1/7/12

Premium increases might balance the books but do

not address the cost drivers

PREMIUM INCREASES – NOT ON

28% premium increase – 84% said there will be job reductions -

12,600 jobs

10% premium increase - 59% said there will be job reductions -

8,000 jobs

Reductions will be achieved by termination, natural

attrition and not filling vacancies

EXTRA PREMIUM ($M)

13.2

18.5

15.5

27.1

53.2

19.6

12.1

15.0

17.5

99.0

18.6

104.6

173.9

91.9

136.0

28.1

SOUTH EAST

CENTRAL…

CENTRAL…

FAR WEST

HUNTER

MID NORTH

MURRAY

NEW…

NORTHERN…

NORTH…

RIVERINA

SYD NE

SYD SE

SYD SW

SYD NW

ILLAWARRA

JOBS IMPACT BY REGION

358

461

308

31

902

405

233

352

426

229

359

1906

2924

1570

1922

610

SOUTH EAST

CENTRAL COAST

CENTRAL WEST

FAR WEST

HUNTER

MID NORTH

MURRAY

NEW ENGLAND

NORTHERN RIVERS

NORTH WEST

RIVERINA

SYD NE

SYD SE

SYD SW

SYD NW

ILLAWARRA

COLLECTION > BREAK EVEN

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Collected Rate(% Wages)

Break EvenRate(% Wages)


Claims per Premium Year

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

WHERE DO THE COSTS LIE?

$M

Weekly 5912

WID 1771

Legal 433

Permanent injury & pain & suffering 827

Medical 3339

Commutations 290

Investigation 383

Rehabilitation 236

Death 81

Asbestos 155

ULIS 106

Other 144

MAIN CHANGES IN COSTS FROM 2008

-200

0

200

400

600

800

1000

1200

$m

Weekly

Workplace InjuryDamages

Legal

S66/67

Medical

Commutations

Investigations

Asbestos


WHAT ARE THE NUMBERS SAYING ABOUT THE

SYSTEM ?

• Re-emergence of a lump sum culture within the system

• Injured workers are staying off work longer

• Some areas of medical expenses are going up at a hyper-

inflated rate

• The injury management system isn‟t working as it was intended.

WHAT IS THE PURPOSE OF THE WORKERS

COMPENSATION SYSTEM ?– WPIM & WC Act S3

a) to assist securing the health, safety and welfare of workers and preventing work-

related injury.

b) to provide: prompt treatment of injuries, and effective and proactive management of

injuries, and necessary medical and vocational rehabilitation following injuries, in

order to assist injured workers and to promote their return to work as soon as

possible,

c) to provide injured workers and their dependants with income support during

incapacity, payment for permanent impairment or death, reasonable treatment and

other related expenses,

d) to be fair, affordable, and financially viable,

e) to ensure contributions by employers are commensurate with the risks faced, taking

into account strategies and performance in injury prevention, injury management,

and return to work, „

f) to deliver the above objectives efficiently and effectively.

ISSUES PAPER/COSTINGS

WEEKLY BENEFITS TO 130 WEEKS

Average weekly earnings to the basis for calculating weekly benefits , not award or agreement rates

Up to 13 weeks – 95% AWE

13 -130 weeks

Total Incapacity – 80% AWE

Partial Incapacity & working

• make up to 95% AWE if working > 15 hrs pw

• make up to 80% AWE if working 15 or less hrs pw

Partial Incapacity & not working

• 80% AWE less deemed earning capacity

Vocational rehabilitation

• Total or partial incapacity rules apply


WEEKLY BENEFITS POST 130 WEEKS

Weekly benefits cease at 130 weeks unless >30% WPI or working

more than 15 hrs per week – benefit 80% AWE

All weekly benefit claimants benefits to cease at 5,7,9 or 11* years

unless > 30% WPI

Work Capacity testing at 78 and 130 weeks

*Four cut-of options 5,7,9 and 11 years have been costed


Work Injury Damages (Common Law)

• No top up payments

• Stronger defences

• Stronger statute of limitations ( 3 years)

Permanent Impairment & Pain & Suffering

• 10% threshold

• No top up payment

• New higher scale incorporating pain & suffering

• Legal representation will not be required except for

disputed claims


• Journey claims- except for work, worker‟s

compensation and training related journeys excluded

• Heart Attacks/ Strokes excluded

• Medical expenses 1 year after weekly benefits cease

• Commutations programme

IMPACT OF CHANGES Weekly Time Limit

5 7 9 11

Liabilities 31/12/11* 14378 14378 14378 14378

Weekly -3576 -3315 -3099 -2919

Medical -1235 -1164 -1102 -1048

WID -36 -36 -36 -36

S66/S67 -332 -332 -332 -332

Legal -233 -233 -233 -233

Revised Liabilities 8966 9298 9576 9810

B/E Premium 1.19% 1.21% 1.23% 1.24% * Excludes Risk Margin and claims handling costs

WHAT ELSE?

WorkCover performance/structure/management of agents

Agent performance

Workers Compensation Commission

Effective injury management support for employers and injured workers

Premium system design & communications (premium notices that can be

understood)

Data collection/quality & impact on scheme management (a centralised

computer system)

WHAT NEXT?

• Joint Parliamentary Committee to report by 13 June

• Legislation by 30 June?

• Non-legislative changes

• Expect deficit to get bigger in the immediate term

WHS & WORKERS COMPENSATION SUMMARY

NATIONALLY

• WHS Harmonisation still some way off

• Workers Compensation harmonisation most unlikely but some better alignments possible

NSW

• WHS Act in and operating

• NSW WHS performance is improving

• WorkCover refocused

• Workers Compensation Scheme in trouble

• Premium increases not the solution

• Legislative and other changes needed with legislation before 30 June

Questions?

Important numbers to remember

Documents

Member update workplace