Modern award superannuation clause review

[2022] FWC 2712

[2022] FWC 2712

FAIR WORK COMMISSION

STATEMENT

Fair Work Act 2009

s.157—FWC may vary etc. modern awards if necessary to achieve modern awards objective

Modern award superannuation clause review

(AM2022/29)

JUSTICE ROSS, PRESIDENT MELBOURNE, 10 OCTOBER 2022

Variation of modern award – on the Commission’s initiative – review and variation of modern award superannuation clauses to reflect current superannuation requirements – approach to the review proposed.

1. In a Statement[1] published on 28 September 2022 it was proposed that a review be conducted of superannuation clauses in all modern awards so that they better reflect current superannuation law requirements and that ensures employers and employees are not misled by the terms of award superannuation clauses. This process would be outside the system of 4 yearly reviews of default fund terms.

1. Three background documents were published with that Statement, to promote discussion of issues relevant to this review:

1. Background Document 1—discusses relevant provisions of the Act, changes to superannuation laws and present difficulties with the application of modern award superannuation clauses, and gives an example of an award variation that might address these difficulties. Background Document 1 also contains some initial questions for interested parties.

2. Background Document 2—contains the superannuation clauses from all modern awards.

3. Background Document 3—groups the superannuation clauses from all modern awards into 6 categories of like clauses.

1. It was envisaged that a Full Bench of the Commission will conduct the modern award superannuation clause review in 2 stages. In Stage 1 of the review, the Full Bench will consider the nature and scope of the review that is required and will review the superannuation clauses in a small initial group of modern awards. Stage 2 would review the remaining modern awards.  

1. A conference was held on Friday 7 October 2022 to provide interested parties with an opportunity to comment on the proposed 2 stage approach outlined above.

1. The transcript of the Conference is available here and a list of attendees is set out at Attachment 1.

1. As outlined in the 28 September 2022 Statement, the proposed review has a limited purpose – to consider the variation of award superannuation clauses so far as necessary to ensure that employers and employees are not misled by the award clauses as to their obligations under current superannuation laws. The particular concern is with the requirements in respect of ‘stapled’ superannuation funds and underperforming superannuation funds.

1. Under the stapled fund requirements, generally, from 1 November 2021, if a new employee does not choose a superannuation fund, the employer must ask the ATO if the employee has a stapled fund (ie a complying fund of which the employee is already a member, and which can accept contributions from the employer); and if the ATO provides stapled fund details then the employer must make contributions to the stapled fund to satisfy choice of fund requirements.

1. Under the underperforming fund arrangements, a fund will not be able to accept contributions for the benefit of an employee if the employee would be a new member of the fund’s MySuper product and the MySuper product is closed to new members because it has failed 2 consecutive annual APRA performance tests.

1. Many awards do not accommodate the stapled fund arrangements or the underperforming product arrangements.

1. The proposed review will be confined to reviewing and varying award superannuation clauses so far as necessary to accommodate the recent changes to superannuation laws, and the stapled fund and underperforming fund arrangements in particular. It is envisaged that the necessary variations could be made under s.160 of the Act so as to ‘remove an ambiguity or uncertainty or to correct an error’.

1. It is not envisaged that award superannuation clauses will require extensive variation.  Section 5.5 of Background Document 1 gives an example of a possible variation of the superannuation clause in the Restaurant Industry Award 2020 to accommodate the stapled fund and underperforming fund requirements.[2]

1. The review will not review the superannuation funds specified in award default fund terms. The Commission does not have power to conduct such a review outside a 4 yearly review of default fund terms under Division 4A of Part 2-3 of the Fair Work Act and is not proposing any such review.

1. During the course of the 7 October 2022 conference, it was generally agreed that a further period of time would be provided so that the ACTU, ACCI and Ai Group can hold discussions regarding the proposed review and seek to identify any areas of agreement between them. These discussions would be without prejudice to the position of any other party and parties with an interest in a limited number of modern awards were encouraged to hold bilateral discussions with other interested parties to identify any common ground.

1. A further conference will be listed for 9:30am on Wednesday 2 November 2022.

PRESIDENT

ATTACHMENT 1 – appearances

ACCI – Scott Barklamb, Simon Farrow

ACTU – Sunil Kemppi; Sascha Peldova-McClelland

Ai Group – Ruchi Bhatt

AMWU – Keely Tobin

APESMA – Margaret Buchanan, Nathaniel McCracken

Australian Education Union – Jack Kenchington-Evans

Australian Higher Education Industrial Association – Catherine Pugsley

Australian Services Union – John Nucifora and Virginia Wills

Australian Public Service – Louise Memmolo

Australia Post – Alicia Casauria, Madeleine Armstrong

CBUS Super – Ailsa Goodwin

CEPU – Yolla Abousleiman

CFMMEU (Construction & Gen. Division) – Stuart Maxwell

CFMMEU (Manufacturing Division) – Vivienne Wiles

CFMMEU (Mining and Energy Division) – Alister Kentish

​NSW Business Chamber Limited and Australian Business Industrial – Rhys Kingston

Pharmacy Guild of Australia – Scott Harris

SDA – Sue-Anne Burnley

UWU – Elliot Womersley

[1] [2022] FWC 2603

[2] The example variation to Restaurant award clause is at Attachment 2.

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