Defence Determination, Conditions of service Amendment (Employment Offer Modernisation) Determination 2023 (No. 4)

EXPLANATORY STATEMENT

Defence Determination, Conditions of service Amendment (Employment Offer Modernisation) Determination 2023 (No. 4)

This Determination amends Defence Determination 2016/19, Conditions of service (the Principal Determination), made under section 58B of the Defence Act 1903 (Defence Act) and in accordance with subsection 33(3) of the Acts Interpretation Act 1901 (AI Act).

Determinations made under section 58B of the Defence Act are disallowable legislative instruments subject to the Legislation Act 2003 (Legislation Act). These instruments are also subject to the interpretation principles in the AI Act.

This Determination amends the Principal Determination which provides benefits for members of the Australian Defence Force (ADF) and their families as part of the member’s conditions of service. The Principal Determination provides a range of benefits that recognise the unique nature of military service and the obligations and limitations that military service places on members and their families. Members undertake service in both the domestic and overseas environments, including on deployments. Specific benefits are provided for each environment.

Purpose

The purpose of this Determination is implement a new bonus framework which has been designed to address short to medium term workforce issues which affect ADF capability, sustainability and to support future workforce growth. The use of bonuses to attract and retain ADF members with critical skills will provide additional time to implement longer term solutions within the Military Remunerative Framework.

The new bonus framework replaces 3 bonuses that exist in the current framework: a general bonus framework, the Reserve capability payment, and the Navy retention bonus for individuals critical to Navy capability.

The current framework has been described by stakeholders as inflexible in its application due to restrictions on the dollar value provided, the high level of authorisation required and complex administrative rules. The new bonus framework provides a modernised structure that is required to attract and retain personnel who are critical to capability or who are in a critical or at risk employment category, and to meet the requirement for increased ADF workforce growth.

Operational details

Details of the operation of the Determination are provided at annex A.

Incorporation by reference

The Determination makes references to sections of the Defence Regulation 2016 (the Defence Regulation), and Part 8 of the Military Superannuation and Benefits Act 1991, as preserved by item 4 of Schedule 4 Defence Legislation Amendment Act (No. 1) 2005. These Instruments are incorporated into the Determination as in force from time to time. Section 1.2.5A of the Principal Determination specifies that a reference to an Act of Parliament or a legislative instrument to which section 14(3) of the AI Act applies are incorporated as in force from time to time, unless otherwise stated.

Human rights compatibility

The statement of compatibility under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 for this Determination is at annex B.

Review options

Decisions that are made under the Principal Determination, as amended by this Determination, may be subject to inquiry under the ADF redress of grievance system provided under Part 7 of the Defence Regulation 2016. Also, a person may make a complaint to the Defence Force Ombudsman.

Consultation

Before this Determination was made, the consultation was undertaken with Navy, Army, Air Force, Defence Tax Management Office and People Systems Business Analysis.

The rule maker was satisfied that further consultation was not required.

Annex A

Defence Determination, Conditions of service Amendment (Employment Offer Modernisation) Determination 2023 (No. 4)

Operational details

Section 1 of this Determination sets out the manner in which this Determination may be cited.

Section 2 provides that the Determination commences on 1 July 2023.

Section 3 provides that this instrument has authority under section 58B of the Defence Act.

Section 4 provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1—Bonus framework

Item 1 inserts a new Part into the Principal Determination to establish the new bonus framework. Chapter 3 Part 3 replaces Chapter 3 Part 5 Divisions 2, 2A and 9 of the Principal Determination, which are repealed by items 4, 5, and 6 of this Determination. Specifically, item 1 does the following.

• Establishes Division 1 which provides general rules that apply to the Part. Specifically, Division 1 provides the following:

Sub-division 1: Interpretation

• Section 3.3.1 establishes the purpose of the Part.
• Section 3.3.2 provides simple definitions of certain words and phrases that apply across the Part.
• Section 3.3.3 defines the phrase ‘commencement day of an agreed period of service’.
• Section 3.3.4 defines a valid offer for a bonus under this Part, which specifies information that must be included in an offer.
• Section 3.3.5 defines a valid acceptance of a valid offer for a bonus under this Part, which includes how and when the offer must be accepted.

Sub-division 2: Effective service

• Section 3.3.6 defines a day of effective service for a member on continuous full time service. This definition does not apply to a member of the Reserves serving on continuous full-time service solely for the purpose of a call out order under Division 3 of Part III of the Defence Act. This means that if a member of the Reserves is performing a period of continuous full-time service and is simultaneously subject to a call out order, this section will continue to apply to the member.
• Section 3.3.7 defines effective service for a member who is the subject to a flexible service determination made under section 23 of the Defence Act. Effective service for a member subject to a flexible service determination is calculated on a fortnightly basis.
• Section 3.3.8 defines a day of effective service for a member of the Reserves not on continuous full-time service, unless that service is under a call out order under Division 3 of Part II of the Defence Act.

Sub-division 3: Application

• Section 3.3.9 specifies who this Part applies to and expressly includes members of the Reserves.
• Section 3.3.10 specifies who this Part does not apply to. It excludes members who, at the time of an offer being made, are unable to provide employable and deployable capability due to medical unfitness, or who have less than 1 year left to serve in the as a member of the Permanent Forces or as a member of the Reserves, whichever applies on the day the offer is made. It also excludes members who have been issued a termination notice under either the Defence Act or the Defence Regulation. A member who has received a termination notice may be eligible for a bonus after a decision has been made on the termination notice.

• Establishes Division 2 which creates the category A bonus, which provides a bonus to members who are critical to capability. Specifically, Division 2 provides the following:
  • Section 3.3.11 establishes the eligibility for a category A bonus. This includes the member receiving a valid offer and making a valid acceptance of that offer. Specific rules are provided that must be satisfied before a member of the Reserves can be provided a category A bonus.
  • Section 3.3.12 specifies the maximum amount a member can receive under a category A bonus. The bonus amount is to be included in the valid offer.
  • Section 3.3.13 specifies the limits that apply to a members agreed period of service under a category A bonus. If the member is a member of the Reserves, it also includes the minimum number of days of effective service the member must serve in a year. The agreed period of service is to be included in the valid offer.
  • Section 3.3.14 specifies the conditions that may apply to a category A bonus, which are to be included in the valid offer. This includes serving the agreed period of service in a specified position or maintaining a specified primary skill.
• Establishes Division 3 which creates the category B bonus, which provides a bonus to members who are in a critical or ‘at risk’ employment category. Specifically, Division 3 provides the following:
  • Section 3.3.15 establishes the eligibility for a category B bonus. This includes the member receiving a valid offer and making a valid acceptance of that offer. Specific rules are provided that must be satisfied before a member of the Reserves can be provided a category B bonus.
  • Section 3.3.16 specifies the maximum amount a member can receive under a category B bonus. The bonus amount is to be included in the valid offer.
  • Section 3.3.17 specifies the limits that apply to a members agreed period of service under a category B bonus. If the member is a member of the Reserves, it also includes the minimum number of days of effective service the member must serve in a year. The agreed period of service is to be included in the valid offer.
  • Section 3.3.18 specifies the conditions that may apply to a category B bonus, which are to be included in the valid offer. This includes serving the agreed period of service in a specified employment category or maintaining a specified primary skill.
• Establishes Division 4 which provides the rules relating to the payment, recovery and cessation of eligibility for a bonus under this Part. Specifically, Division 4 provides the following:
  • Section 3.3.19 specifies when a bonus that is a retention bonus is to be paid. The section enables a member to choose whether to receive the bonus as a single lump sum or as 2 lump sums that occur 12 months apart. The first payment of a retention bonus is payable from the first pay day after the member commencement date of their agreed period of service for the bonus as specified in the valid offer.

If the member chooses to receive the bonus in two payments and the member separates from the ADF before the second payment becomes payable, the payment is to be made as a part of the members separation pay.

• Section 3.3.20 specifies when a bonus that is a completion bonus is to be paid. The section enables a member to choose whether to receive the bonus as a single lump sum or as 2 lump sums that occur 12 months apart. The first payment of a completion bonus is payable from the first pay day after the member completes their agreed period of service for the bonus.

If the member chooses to receive the bonus in two payments and the member separates from the ADF before the second payment becomes payable, the payment is to be made as a part of the members separation pay.

• Section 3.3.21 provides that a member who is receiving a retention bonus and does not complete their agreed period of service must repay the bonus amount, or a part of the bonus amount, in certain circumstances. These circumstances include taking voluntary action that causes them to leave the employment category or primary skill for which the bonus was offered, leaving their Service or the ADF, or transferring between the Permanent Forces and the Reserves. If the member is a member of the Reserves and voluntarily transfers to the Permanent Forces, the member must only repay the bonus if their bonus condition was to complete the agreed period of service in a specified position.

A member will only have to repay a part of the bonus amount if they have completed 3 years or more of their agreed period of service. The amount they have to repay is calculated in accordance with a formula.

• Section 3.3.22 provides that a member who is to receive a completion bonus and does not complete their agreed period of service ceases to be eligible to receive the bonus amount in certain circumstances. These circumstances include taking voluntary action that causes them to leave the employment category or primary skill for which the bonus was offered, leaving their Service or the ADF, or transferring between the Permanent Forces and the Reserves. If the member is a member of the Reserves and voluntarily transfers to the Permanent Forces, the member must only repay the bonus if their bonus condition was to complete the agreed period of service in a specified position.

Members will also have to repay the bonus if their service in the ADF is terminated or they are discharged under the Defence Force Discipline Act 1982.

Item 2 repeals and substitutes the heading of Part 5 of Chapter 3 of the Principal Determination to better reflect the part’s content as a consequence of changes made by this Determination.

Items 3 to 6 repeal Divisions 1, 2, 2A and 9 of Part 5 to Chapter 3 of the Principal Determination which provide for specific bonuses and administrative detail that are being replaced by the new bonus framework. The divisions are being repealed as a consequence of the changes made by item 1 of this Determination.

Items 7 to 9 repeal Annexes 3.5B, 3.5.G and 3.5.J to Part 5 of Chapter 3 of the Principal Determination, which provide forms used for the administration of bonuses being repealed by items 3 to 6 of this Determination.

Schedule 2—Savings provisions

Schedule 2 provides savings provisions for members who are currently on one of the 4 bonus frameworks which are being repealed by this Determination. Members who have accepted an offer of a bonus before the commencement of this Determination will remain on the bonus until they have completed their agreed period of service or leave the bonus through specified means.

Clause 1 defines terms that are used in the schedule.

Clause 2 provides that the Schedule applies to a member who has accepted an offer of a bonus before the commencement of this Determination, but is yet to complete the service obligation associated with the bonus.

Clause 3 saves the rules in relation to bonuses made under Divisions 2, 2A or 9 of Part 5 to Chapter 3 of the Principal Determination for members who have not completed the service obligation associated with the bonus they have accepted. The rules cease to apply to the member once they have completed their service obligation or, under the saved rules, the Division no longer applies to the member.

Annex B

Defence Determination, Conditions of service Amendment (Employment Offer Modernisation) Determination 2023 (No. 4)

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Overview of the Determination

The purpose of this Determination is implement a new bonus framework which has been designed to address short to medium term workforce issues which affect ADF capability, sustainability and to support future workforce growth. The use of bonuses to attract and retain ADF members with critical skills will provide additional time to implement longer term solutions within the Military Remunerative Framework.

Human rights implications

Right to the enjoyment of just and favourable conditions of work

The protection of a person's right to remuneration engages Article 7 of the International Covenant on Economic, Social and Cultural Rights. Article 7 guarantees just and favourable conditions of work, including remuneration, safe and healthy conditions, equal opportunity and reasonable limitations.

Assessment of compatibility

This Determination is compatible with human rights as it implements a new bonus framework which will provide members with critical skills or who are in at risk employment categories with a financial incentive to remain in the ADF as a part of their conditions of service.

Conclusion

This Determination is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.