During Senate Estimates earlier in the year, I was able to get Coal LSL to admit that there were discrepancies in hours worked reported by employers and to start an audit. Since this questioning, many other workers have come forward with issues and questions they wanted asked in Senate Estimates. Accountability and transparency seems to be lacking and workers are in the dark as to best manage their long service leave entitlements.
Transcript
Senator ROBERTS: Thank you, Chair. Thank you both for appearing today. Could you tell me, firstly, what has Coal LSL done since last estimates to address the errors and wrongs identified in employer data and when will people be compensated, and what is the total value of the errors to date?
Ms Perks: I’ll start with—
CHAIR: We’ve lost you, I think, again. Hello? Can we hear you? Can you speak again?
Ms Perks: Yes. We’re getting a delay.
CHAIR: You’re getting a delay; a delay on your voice? So there’s an echo? We might pull the plugs out. We will suspend briefly again, so can you log off and log on again, please? Thank you.
Ms Perks: We will.
CHAIR: Thank you. Senator Roberts.
Senator ROBERTS: Thank you, Chair. What has Coal LSL done since last Senate estimates to address the errors and wrongs identified in the employer data and when will people be compensated, and what is the total value of the errors to date?
Ms Perks: Thank you, Senator. The six individuals who were identified back in October who were employed by the Programmed TESA Group have had their records adjusted and it has resulted in a change of 55 hours of entitlement for the total six out of the eight that were identified. Since October, Programmed Tessa, who was the employer—
CHAIR: I think what happened there is that there was more feedback.
Ms Perks: We’re getting the question coming back, circling.
CHAIR: Okay. So the question is on repeat. That would be amusing. It’s a very important question, Senator Roberts. We will suspend again briefly and we’ll do it through Chorus Call. Someone from the secretariat will be in touch to advise you how to do that. We will get you on the phone but not via videoconference.
Ms Perks: Okay.
CHAIR: For the third time, Senator Roberts is going to ask his question. Senator Roberts.
Senator ROBERTS: Thank you, Chair. What has Coal LSL done since last Senate estimates to address the errors and wrongs identified in employer data and when will people be compensated, and what is the total value of the errors to date?
Ms Perks: Since the last Senate estimates in March the focus of the organisation has been on getting visibility of the issues that were identified. The six individuals who were addressed in the October Senate estimates have had their records updated, which resulted in a change of 55 hours of entitlement for the six in total. Regarding the other two individuals of the eight, it hasn’t resulted in a change in their record on that review. Now, in saying that, what has commenced outside of those six individuals has been a commitment by Coal LSL to commence an audit of the employer data for any employers who have casual employees within the Coal LSL scheme. That audit has commenced and is in train. We don’t have visibility yet of what the outcome of the audit will be or any changes to individuals’ records as a result of that audit.
Senator ROBERTS: Thank you. The second question: why doesn’t a casual get the same Coal LSL payout as a permanent employee when they both work the same hours and roster on the same site in the same role? If this is because of the act, why hasn’t Coal LSL referred the matter to the government and why hasn’t the government fixed this?
Ms Perks: If a casual employee works a 35-hour week, which is a full-time equivalent, they will accrue the same long service leave entitlement as a full-timer. Our records for the employee are held in hours, and if the employee does work for 35 hours during the week their records will be at that full-time equivalent maximum entitlement.
Senator ROBERTS: Thank you. Are casuals made aware that they can waive the Coal LSL scheme and have the contribution paid direct to them? As you will appreciate, this would benefit a lot of casuals that may not stay for the eight-year qualifying period.
Ms Perks: I can’t talk to whether casuals, in particular, have visibility of that. It was an enhancement in our legislation back in 2010 to include waiver agreements as an option for all employees in the scheme. I can take that question on notice. From memory, we have as minimal as four waiver agreements, but I will verify that number and confirm that.
Senator ROBERTS: Sorry, what was that last sentence you said?
Ms Perks: From memory, I think we have four waiver agreements in place out of 426,000 records, but I will take that question on notice and verify that.
Senator ROBERTS: Why, if a casual does take the Coal LSL waiver option, do casuals only get paid two per cent when the Coal LSL payout is based upon 2.7 per cent?
Ms Perks: All employees, irrespective of their employment status, would be paid based on certain criteria in the legislation which my colleague Mr Kembrey will talk to. The two per cent that you’re talking about is our payroll levy and is not correlated with an employee’s long service leave entitlement. That percentage is in relation
to the payroll levy that employers are required to pay. It is a tax that’s imposed, and that levy of two per cent has been in place since 2018. Prior to that it was 2.7 per cent, but it was reduced in 2017 to that lower level. It’s a rate that’s applicable to all employers who are registered in the fund.
Senator ROBERTS: Could you please provide details of the number of casual employees who have contributions made to the scheme for them and detail how they may have been paid out? How many have left the industry and how much money does this represent for those employees who have not returned to the industry in, say, over three years? In other words they haven’t been paid out and they’ve left the industry.
Ms Perks: I could talk to the amount of casuals who are active in the industry today. According to our records, in round figures it’s 9,000. I will need to take your other questions on notice. They are quite detailed questions that will need to be responded to.
Senator ROBERTS: Yes, that’s fine; take them on notice. They are very important to us. Can you explain in detail why the amounts contributed by employers to Coal LSL for eligible employees, both permanent and casual, are different to the amounts paid out for those employees? Could you please explain the reasons for the discrepancy in detail, the break-up of what funds go where and the total value that this represents annually?
Ms Perks: There are two important components of the fund. The payroll levy is a tax that’s collected on behalf of the government. That is received monthly by employers. It is remitted to the commonwealth and appropriated back. Separate from that is the records that we hold for all employees in the fund, and that entitlement is accrued in hours. The payment that’s made to the employee will be reliant on their employment agreement. Our legislation does specify the minimum that should be paid. Mr Kembrey might be able to refer us to the section in the legislation that talks about minimum payments that are required on termination or in-service leave. But it is a different part of the legislation to the payroll levy collection act, which talks about levies that are received for the fund.
Senator ROBERTS: Thank you. Is Mr Kembrey going to add anything?
Mr Kembrey: The best way to break down the question is that the payment of levy is not necessarily correlated with the accrual of the entitlement. When entitlements are paid, they are paid at the rate that the employee is earning at the time that they take that long service leave.
Senator ROBERTS: Can you please reconcile the difference between employer contributions and employee payouts? Please also advise what happens to, firstly, the funds where an employee leaves the industry prior to qualifying and fails to return to the industry and, secondly, the total amount of these funds where employees have left the industry, how much is dispersed, and to whom, on an annual basis over the last seven years.
Ms Perks: The fund is a pooled fund. It’s important that employees of the fund understand we are very different to a financial institution and super funds. The fund is a pooled fund. The nature of portable long service leave means employees can move in and out of the industry, and they can have a maximum break from the industry of eight years before their qualifying service accrual is impacted. That’s important context. We must hold the funds for that period of a break in service of eight years, in case that employee returns to the industry, so that we can continue to ensure that we have sufficient funds to pay out for future long service leave.
The actuary assesses and protects the fund’s assets and liabilities based on important assumptions. One is investment returns. There is also the probability of employees reaching eight years of qualifying service. In regard to the employees that you’re talking about, the probability of an employee meeting that eight years of qualifying service starts at a base of 50 per cent. Our data tells us that an employee that’s been in the industry for less than one year has a 49 per cent chance of meeting that eight years of qualifying service. We hold the funds as a pooled fund through that duration of a maximum of eight years break period to anticipate that future liability that the fund may incur. It is a complex calculation that the actuary conducts. It has fundamental assumptions that underpin that assessment of the fund’s assets and liabilities.
Senator ROBERTS: Could you please tell us how much money is involved in people who have gone beyond the eight years and are not in the industry, and won’t ever get a payout? What happens to their money?
Ms Perks: Senator, can you ask that question again, please?
Senator ROBERTS: If someone leaves the industry and a period of eight years lapses, what happens to their money?
Ms Perks: The fund is structured as a pooled fund. Employers pay a tax to the government that is appropriated back to the fund. The actuary assesses assets and liabilities. We hold an entitlement in hours for the employee. We do not hold an asset which is financially attributed to that individual record. I’m being specific but the record doesn’t have a monetary dollar correlated with it at the record level. It is reported in hours. The actuary assesses
based on the hours that we hold, and 55 million hours of entitlements were held at June 2020. The actuary assesses the likelihood of paying liabilities out of the fund based on the entitlements that are held in hours.
Senator ROBERTS: You would still have to account for everything in a dollar sense if it’s a pooled fund, wouldn’t you? Some people are not going to come back after eight years, so what happens to that money? What happens to those hours? Where do they end up?
Ms Perks: If an employee has a break from the industry for eight years or further, their records will cease to accrue. If they return to the industry they would start from zero years of qualifying service again. So it is an eight years break, which is the most generous break that any long service leave provision allows for. The actuary assesses the likelihood of someone returning to the industry. In that assessment the actuary says that the fund needs X dollars to pay out future liabilities. With that they correlate a payroll levy that is appropriate to be imposed on employers in regard to the collection of future levies.
In the situation where we have seen a larger number of employees not returning to the fund, one would assume that could result in the pooled fund increasing and the liabilities would decrease. If our assets are in excess, that could result in us recommending to the minister to reduce that payroll levy further from that two per cent to a lower rate. The assets and liabilities are correlated continuously by the actuary to assess whether the payroll levy that’s imposed on employers is sufficient to meet the liabilities that are projected to be incurred by the fund in the future.
Senator ROBERTS: Are you saying that if someone is out of the industry for more than eight years, if they come back after that, they will go back to zero and start again? If there’s a surplus or an excess of funds in the pooled fund, the minister will have a recommendation to reduce the payroll levy?
Ms Perks: That is it, in a simplified manner, yes. The three correlate, yes.
Senator ROBERTS: In 2019 I drew to your attention discrepancies and outright employer misreporting. What have you done to fix all employee entitlements? What steps has Coal LSL taken? If this response took the form of, say, a review project, when will the project be completed, how much will the project have cost and will Coal LSL be prosecuting employers who have negligently or wilfully misreported or mispaid Coal LSL contributions?
Ms Perks: The important action that Coal LSL has taken since March is to commence an audit of employers of casuals; 9,000 casuals are active in the industry to date. That audit program will extend to review those records. That is in train. The outcomes of that audit will be assessed, and certainly they will be reviewed as to whether rectification or penalties would be appropriate if there’s any understanding of deliberate misreporting of hours.
Senator ROBERTS: You have the ability to penalise employers and prosecute them; is that right?
Mr Kembrey: In certain circumstances, that is correct. In terms of the time lines, it will be a rolling time line. We’re in the early stages of this. We’d expect to see some results of the audit in the next month or two, and that rolling out over the next 12 months.
Senator ROBERTS: If Coal LSL is not prosecuting any parties for negligent or wilful misreporting, could you please advise us of the assessment process that Coal LSL went through, how this assessment process was managed, by whom, and also explain in detail, despite the evidence of misreporting, why no parties were held to account? You won’t be able to do that for another month, at least, but would you be able to do that, please?
Mr Kembrey: Certainly, we can take that on notice.
Senator ROBERTS: Thank you. Could you please report whether any members of the Minerals Council of New South Wales were parties or related entities to those who misreported, and provide a list of same, including the number of instances by entity? You can take that on notice as well, because that won’t be able to be done for at least a month.
Mr Kembrey: Yes, Senator.
Senator ROBERTS: Thank you. I also have concerns, as we’ve spoken about in the past, with regard to the governance of Coal LSL. I’d like some data, please. Could you provide an Excel spreadsheet that includes all employers registered with Coal LSL covering the period 1 July 2012 to 30 June 2020, including the company or business name, their ABN, the authorised officers, active dates, and details of payments or reimbursements made to each registered employer for the subject period?
Mr Kembrey: Senator, that would be an extensive task. Potentially, we could discuss what the information is that you’d like from that, over an eight-year period. When you say ‘authorised officers’, I’m assuming you mean directors?
Senator ROBERTS: Yes, the people you’re dealing with.
Mr Kembrey: Often we’re not dealing directly with directors; we’re dealing with employees of the company. Senator, perhaps we will take this question on notice and we can talk further about how we could present the material that you’re after.
Senator ROBERTS: That would be great; thank you. Could you also please provide details of the process used to calculate payments to entitled employees; that is, how the amounts received, the entitlement and other costs, or inputs and outputs, are calculated? I’d like to understand the process.
Ms Perks: We’ll take that question on notice. We can certainly give more context to the payroll levy collection, the calculation of the entitlement and the employer reimbursement rules that relate to the outflow.
Senator ROBERTS: Thank you. Can you please provide details of where Coal LSL funds received for workers who leave the coal industry are held at all material times—I know you talked about them being in hours—who has the records, and the details of the process following the cessation of contributions for employers? Could you tell us where the hours or money goes? Could you also please include full details of where these funds are ultimately repatriated and full details of any service fees, costs or commissions paid and who they are paid to?
Ms Perks: We can take that on notice, Senator. I can say there are no commission service fees in regard to payments, but we will take that question on notice.
Senator ROBERTS: Thank you. Could you please provide an Excel spreadsheet of all entities that Coal LSL pays or transfers funds to, including but not limited to company business name, ABN, authorised officers, dates and details of payments or reimbursements made to each entity, including total payments, and an explanation as to the payment—for example, fees et cetera?
Ms Perks: Is that in relation to the employers in the fund or are you talking more broadly of every transaction that the fund incurs?
Senator ROBERTS: No, just the payments that are made to people who are entitled to have Coal LSL.
Ms Perks: We’ll take that on notice, yes.
Senator ROBERTS: Thank you. I’m led to believe that registered employers have great difficulty in reconciling the payments made to entitled employees by Coal LSL as they don’t seem to correlate to the employer contributions. Could you please detail the reasons for any differences between employer contributions and the total amounts paid to eligible employees and, in this regard, please advise where unallocated, surplus or remaining funds or hours are allocated and please advise whether this allocation complies with your constitution and governance framework? Have these matters been raised in any internal or external audit over the period 1 July 2012 to 30 June 2020?
Ms Perks: The first part of the question I’m taking as being similar to a previous question; so we’ll answer that in light of the previous question. Coal LSL is audited by the Australian National Audit Office annually. The audit has been completed. There are no findings in the audit and we’ve had no findings in our audit for the last two years. We can give you a copy of that audit report. It is included in our annual report, which is going through the tabling process currently; so that is available for the public’s review.
Mr Kembrey: I note that in that question there were about five questions; so we’ll take a number of those later ones on notice. I think the first point that you raised was in regard to employers struggling to correlate the reimbursement to the payment to employees; is that correct?
Senator ROBERTS: Yes, that’s correct.
Mr Kembrey: The matter of what is paid to an employee is a matter that is to be decided between the employer and the employee. Then the employer requests a reimbursement for that payment and we need to see some evidence that the money that they are requesting from the fund was paid to the employee. And with the reimbursement, there needs to be some correlation with the levy payment that they’re paying—in a sense, the salary, the payment or the wages that they’re paying a levy on—so that we can ensure that either they’re not being over-reimbursed or the employee certainly is not receiving the reimbursement in full. That’s where the correlation should be. Without any specifics, it’s difficult for me to talk to it.
Senator ROBERTS: Then we might be in touch with you for more on that. I’ve raised many concerns in regard to the treatment and payment of Mr Simon Turner. I note that you’re aware that Mr Turner was forced to leave the coalmining industry due to workplace injuries at the Mt Arthur coalmine that left him totally and permanently disabled, TPD. I note that, approximately three years after my raising these injustices in Senate estimates, Mr Turner has had his case only partly reviewed and that Chandler Macleod, his employer, and Coal LSL have yet to resolve his termination status as being TPD. When will this status be updated and when will Mr Turner’s outstanding questions be addressed?
Mr Kembrey: As we discussed back in the estimates in March, we have been assisting Mr Turner for a number of years now. And the difficulty with that particular issue you’re raising is that that is a dispute between Chandler Macleod and Mr Turner. We have been trying to mediate that and obtain some factual evidence to support the position put forward by Chandler Macleod. At this point in time the parties are holding their positions and they don’t agree with each other. The last we were advised is that those matters are subject to court proceedings in the Federal Court at present. So there is not anything more we can do to try to resolve that, unfortunately.
Senator ROBERTS: What sorts of records would you turn to for proof?
Mr Kembrey: We would turn to contemporaneous correspondence that evidences the reasons. As you know, this is a dispute about the reason why Mr Turner was terminated by Chandler Macleod back in 2016; so we have requested contemporaneous material that supports the position that Chandler Macleod put forward or justifies that position, and that has been provided. We’re not in a position to make a legal assessment of that, because that is not our role; the Fair Work Commission has the power to do that. But I believe that Fair Work Commission proceedings are on foot and those proceedings have been transferred to the Federal Court. Hopefully, for Mr Turner, there is some resolution to that matter in the near future.
CHAIR: Senator Roberts, just before your next question, we will be breaking at quarter to four for the afternoon tea break and concluding with these witnesses and I know that Senator O’Neill does have some questions. If the two of you could perhaps have a conversation about timing for the remaining nine minutes that would be fantastic.
Senator ROBERTS: I’ve got four more questions that I’ll put to you on notice, Mr Kembrey and Ms Perks, but I’ll ask this question: Queensland and Hunter Valley coalminers and coalminers everywhere expect Coal LSL to maintain a high standard of probity. Casual coalminers expect that you will do the right thing by them and give them the freedom of choice to waive the Coal LSL contributions for them to receive the 2.7 per cent or the two per cent as additional income. I just want to make that point on the record.
