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Limebite 07/23

Protecting Worker Entitlements Act – implications for employers and insurers

Joel Zyngier

On 22 June 2023, Parliament passed the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth) (PWE Act), which amends the Fair Work Act 2009 (Cth) (FW Act). It received Royal Assent on 3 July 2023.

The changes made will have significant implications for employers and employment practices and statutory liability insurers.

The most significant changes are:

  • from 1 January 2024, employees will have an enforceable entitlement to superannuation in the National Employment Standards (NES) and will be able to seek civil penalties for failure to pay superannuation
  • commencing 1 July 2023, employees will have more access to unpaid parental leave (unpaid parental leave); and
  • commencing 1 July 2023, employees can authorise employers to make more deductions from payments due to employees, where the deductions are principally for the employee’s benefit.


From 1 January 2024, Part 2-2 of the FW Act will include a new entitlement to superannuation contributions as part of the NES. Employers will have a statutory obligation under the NES to make contributions to a superannuation fund for the benefit of an employee. This is not only to avoid liability to pay the superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 (Cth) in relation to the employee but also to avoid contravening the NES.

The changes also provide a right for employees to pursue their unpaid superannuation as a workplace entitlement. This means there will be a statutory mechanism by which a broad range of employees can enforce and recover unpaid superannuation.

There will be new civil penalties for failure to comply with the obligation to make superannuation contributions: up to 60 penalty units ($16,500) for an individual and up to 300 penalty units ($82,500) for a body corporate (600 penalty units / $165,000 and 3,000 penalty units / $825,000 for a serious contravention). Courts could also make other orders, including compensation and even general damages, if an employer contravenes these provisions.

Unpaid parental leave

The changes further strengthen access to unpaid parental leave and removes barriers to parents sharing responsibility for caring, by:

  • allowing employees to access up to 30 days of their entitlement as flexible unpaid parental leave days, which may be taken a day at a time within the first 24 months of the child’s birth or adoption placement. Flexible unpaid parental leave days are an exception to the requirement that unpaid parental leave must be taken in a single continuous period
  • allowing employees to commence unpaid parental leave at any time in the 24 months following the birth or placement of their child
  • removing barriers preventing employee couples from taking unpaid parental leave at the same time
  • allowing pregnant employees to access flexible unpaid parental leave in the six weeks prior to the expected birth of their child
  • allowing parents to request an extension to their period of unpaid parental leave, regardless of the amount of leave the other parent has taken
  • removing provisions relating to ‘employee couples’ and allowing all employees to take up to 12 months unpaid parental leave and request a further 12 months of unpaid parental leave, regardless of how much leave their partner or spouse takes, and
  • removing the concept of ‘concurrent leave’ and allowing employees to take unpaid parental leave at the same time, without limitation.

The PWE Act also amends references to ‘maternity leave’ throughout the FW Act, to be replaced with the term ‘parental leave’.

Deductions from wages

Employees will be permitted to authorise employers, in writing, to make regular deductions for amounts that vary from time to time, provided that the deductions are not for the direct or indirect benefit of the employer.

This means that where an employer offers deductions, an employee will be able to choose whether they authorise only a set amount be deducted or whether they authorise an ongoing deduction for an amount that varies from time to time. The employee will be able to specify a monetary cap above which deductions cannot increase.

 Other changes

Other changes effected by the PWE Act (not discussed in detail here) are:

  • providing greater certainty for the work status of migrant workers by dealing with the interaction between the FW Act and the Migration Act 1958 (Cth)
  • clarifying the operation of Fair Work Commission workplace determinations and enterprise agreements, and
  • ensuring casual employees working in the black coal mining industry are treated no less favourably than permanent employees in relation to long service leave.

Implications for employers

Unpaid parental leave: It is critical for all employers to review and update their parental leave policies (and employment agreements) to ensure they are consistent with the new laws. Employers should also ensure managers, human resources, payroll and any other staff involved in approving and managing unpaid parental leave are aware of the changes.

Superannuation: employers should already be paying superannuation in accordance with law. However, given the new penalties and changes in superannuation minimum rates, it is a good opportunity for employers to review their superannuation payment arrangements.

Deductions from wages: employers should ensure payroll staff are aware of the changes and consider whether wage deduction forms or policies need updating, to reflect the ability for employees to specify increasing amounts of deductions and monetary caps on deductions.

Implications for employment practices / statutory liability insurers

These changes bring a number of important implications for employment practices / statutory liability insurers:

  • new types of claim and coverage consequences – superannuation: employment practices / statutory liability insurers will need to grapple with coverage implications arising from employee claims for superannuation. A policy may exclude the entitlements claim but still provide defence costs cover. Further, there may be cover for defence costs and penalties under a statutory liability policy, if the employee seeks statutory penalties for contravention of the FW Act requirement to pay superannuation contributions.
  • new types of claim – unpaid parental leave: the expansion of protected unpaid parental leave entitlements could see employers failing to grant unpaid parental leave according to law. This may resulting in claims by employees for breaches of their unpaid parental leave rights, seeking penalties, damages and non-monetary relief (such as declarations).

Contact our Workplace team for assistance with the above or any other workplace relations and safety matter.

This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.