House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)

Chapter 3 - Statement of Compatibility with Human Rights

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

Schedule 1: Extending the operation of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020

3.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

3.2 Schedule 1 to the Bill extends the period over which the Government can make payments authorised by the Act. The extended period will now end on 28 March 2021 instead of 31 December 2020. This change facilitates the JobKeeper scheme being extended to 28 March 2021.

3.3 Schedule 1 amends the tax secrecy provisions in the TAA to allow protected information relating to the JobKeeper scheme to be disclosed to an Australian government agency for the purposes of the administration of an Australian law. Such disclosures can only be made for a purpose relating to the Coronavirus.

3.4 Schedule 1 to the Bill also extends the period in relation to which a related information sharing determination under Schedule 2 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 can be made.

Human rights implications

3.5 Schedule 1 to the Bill may engage the following human rights or freedoms:

Right to work

3.6 The measure engages the right to work in Articles 6 of the International Covenant on Economic, Social and Cultural Rights.

3.7 Article 6(1) recognises the right to work and obliges States Parties to take appropriate steps to safeguard this right.

3.8 The JobKeeper scheme that is being extended under these amendments helps to support the viability of Australian businesses by providing a wage subsidy during the economic disruption caused by the Coronavirus pandemic.

3.9 The measure is compatible with human rights and positively engage the right to work as the JobKeeper scheme is aimed at assisting employers and keeping people in jobs.

Privacy

3.10 Article 17 of the International Covenant on Civil and Political Rights (the ICCPR) provides:

No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

3.11 The amendments made by Schedule 1 to the Bill are compatible with Article 17 of the International Covenant on Civil and Political Rights as its engagement will neither be unlawful or arbitrary.

3.12 In order for an interference with the right to privacy to be permissible, the interference must:

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be authorised by law;

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be for a reason consistent with the International Covenant on Civil and Political Rights; and

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be reasonable in the particular circumstances.

3.13 The United Nations Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

3.14 The engagement with the prohibition on the interference with privacy is lawful as the amendments authorise the disclosure of information in limited circumstances.

3.15 The amendments are not arbitrary as they are aimed at a legitimate objective and are proportionate and reasonable. The JobKeeper scheme has involved changes to a number of Australian laws and programs administered by Commonwealth, the States and Territories and their agencies. The amendments to the TAA ensure that such agencies can access the information they need to undertake their important functions under an Australian law that relates to the Coronavirus. Disclosure under those amendments are limited to information disclosed for a purpose that relates to both the administration of an Australian law and to the Coronavirus. The amendments extending the period in relation which an information sharing determination can be made ensure that such determinations can continue to require information to be given to the Department of Social Services for compliance checks in relation to payments made under the JobKeeper scheme. Such compliance checks are essential in maintaining the integrity of the social welfare system and the JobKeeper scheme.

Conclusion

3.16 Schedule 1 to the Bill is compatible with human rights. Importantly, Schedule 1 positively engage the right to work as the JobKeeper scheme is aimed at assisting employers and keeping people in jobs for longer.

Schedule 2 - JobKeeper-related provisions of the Fair Work Act 2009

3.17 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

3.18 Schedule 2 to the Bill supports the temporary extended operation of the JobKeeper scheme by providing employers with continued flexibility to respond to the impacts of the Coronavirus pandemic while also assisting employees to remain in employment and connected to their workplaces.

3.19 Part 1 of Schedule 2 extends the operation of the temporary JobKeeper provisions in Part 6-4C of the Fair Work Act until 28 March 2021, in line with the extended end date of the JobKeeper scheme. However, the flexibilities in Part 6-4C concerning annual leave will still be repealed at the start of 28 September 2020 per the original repeal date. The preservation of this repeal date for the annual leave provisions is given effect by Part 3 of Schedule 2.

3.20 Part 2 of Schedule 2 makes substantive changes to Part 6-4C of the Fair Work Act by creating two broad categories of employers who can access particular flexibilities under the Part in certain circumstances from 28 September 2020:

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employers who are eligible for JobKeeper payments after 28 September 2020 (qualifying employers); and

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employers who did receive one or more JobKeeper payments in the period prior to 28 September 2020, but no longer qualify for a payment after 28 September 2020 (legacy employers).

3.21 Qualifying employers will retain access to the full range of flexibility measures in Part 6-4C in the extended period of operation of the provisions (with the exception of annual leave provisions being repealed on 28 September 2020).

3.22 Legacy employers who have a certificate stating they have experienced a 10% decline in turnover will have access to modified flexibility measures from 28 September 2020, allowing these employers (subject to meeting the specific requirements of each provision) to:

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give employees for whom the employer previously received a JobKeeper payment a:

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JobKeeper enabling stand down direction (to no less than 60% of the employee's ordinary hours as at 1 March 2020, before the impact of the Coronavirus and that does not require the employee to work less than 2 consecutive hours in a day that they perform work),

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JobKeeper enabling direction regarding duties of work, or

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JobKeeper enabling direction regarding location of work; and

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request employees for whom the employer previously received a JobKeeper payment perform their duties on different days or at different times, which the employee cannot unreasonably refuse (as long as the agreement does not require the employee to work less than 2 consecutive hours in a day).

3.23 The existing safeguards that apply to each of these types of JobKeeper enabling directions and requests (and resulting agreements) about days or times of work for qualifying employers will also apply to (or have been strengthened for) directions given or requests (and resulting agreements) made by legacy employers in accordance with the new provisions.

3.24 Parts 4 and 5 of Schedule 2 make consequential amendments.

3.25 Other aspects of Part 6-4C that will be automatically extended as a consequence of these amendments include:

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the existing safeguards in relation to changes to working arrangements under Part 6-4C (including an increased notice period for JobKeeper enabling directions given by legacy employers and expanded consultation requirements);

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requirements for employers to comply with the employer payment obligations to employees;

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the right for employees working reduced hours to request to engage in reasonable secondary employment or undertake training or professional development;

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rules about accrual of service and calculation of benefits; and

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the FWC's dispute resolution powers to deal with disputes arising under Part 6-4C, including by arbitration.

3.26 The extension of Part 6-4C will provide qualifying and legacy employers with continued flexibility to respond to the impacts of the Coronavirus pandemic while also assisting employees to remain in employment and connected to their workplaces.

Human rights implications

3.27 Schedule 2 to the Bill engages the following rights:

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the right of everyone to social security in Article 9 of the International Covenant on Economic, Social and Cultural Rights, and the right of everyone to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions in Article 11;

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the right to work and rights in work including the right to just and favourable conditions of work - Articles 6(1) and 7 of the International Covenant on Economic, Social and Cultural Rights; and

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the criminal process rights contained in Articles 14 and 15 of the International Covenant on Civil and Political Rights.

The right of everyone to social security and an adequate standard of living

3.28 The objective of facilitating the extension of the JobKeeper payment to employees through employers promotes Articles 9 and 11 of the International Covenant on Economic, Social and Cultural Rights by providing further payment to assist in achieving an adequate standard of living. The pursuit of this objective also promotes human rights by supporting the Convention on the Rights of Persons with Disabilities.

3.29 The measure is compatible with and promotes the right to social security and an adequate standard of living.

Right to work and rights in work

3.30 The measure engages the right to work and rights in work in Articles 6 and 7 of the International Covenant on Economic, Social and Cultural Rights.

3.31 Article 6(1) recognises the right to work and obliges States Parties to take appropriate steps to safeguard this right. The United Nations Committee on Economic, Social and Cultural Rights has stated that the right to work in Article 6(1) of the International Covenant on Economic, Social and Cultural Rights encompasses the need to provide the worker with just and favourable conditions of work.

3.32 Article 7 requires that States Parties recognise the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular, remuneration that provides all workers with fair wages, a decent living and rest, leisure and reasonable limitation of working hours and periodic holidays with pay, as well as remuneration for public holidays.

3.33 Australia has ratified a range of relevant ILO conventions, including:

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the Unemployment Convention 1919 (No. 2), which was adopted with regard to the 'question of preventing or providing against unemployment'; and

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the ILO's Employment Policy Convention 1964 (No.122) (ILO Convention 122), which the ILO considers a 'priority' governance convention.

3.34 The extension of Part 6-4C as given effect in Schedule 2 will provide qualifying and legacy employers with continued flexibility to respond to the impacts of the Coronavirus pandemic while also assisting employees to remain in employment and connected to their workplaces.

3.35 Legacy employers will only be able to temporarily alter the working arrangements of their employees if they have a certificate stating they satisfy the 10% decline in turnover test for the preceding quarter, and will only have access to a modified and reduced range of flexibility measures compared to qualifying employers. This is appropriate as these employers are still recovering from a significant financial downturn.

3.36 The existing safeguards will continue to apply in relation to changes to working arrangements made under Part 6-4C for both qualifying and legacy employers and their employees, including:

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mandatory notice and consultation requirements for JobKeeper enabling directions (including an increased notice period for JobKeeper enabling directions given by legacy employers and expanded consultation requirements);

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a requirement that JobKeeper enabling directions must not be unreasonable in all of the circumstances;

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a requirement that JobKeeper enabling stand down directions can only be used when the employee cannot be usefully employed for their normal days or hours because of changes to business attributable to the Coronavirus pandemic or government initiatives to slow the transmission of Coronavirus;

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a requirement that changes can only be made to an employee's duties or location of work where the new duties and location are safe and reasonably within the scope of the business' operations, and where the employer reasonably believes that the direction is necessary to continue the employment of one or more employees;

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the entitlement for employees subject to a JobKeeper enabling stand down direction to make a request to engage in reasonable secondary employment, or to undertake training or professional development, which the employer cannot unreasonably refuse; and

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changes to an employee's days or times of work can only be made by agreement.

3.37 JobKeeper enabling directions or agreements in place on 27 September 2020 can only continue to operate if all the relevant criteria for the particular direction or agreement continue to be satisfied. For example, if a JobKeeper enabling stand down direction is in place on 27 September and the employer is a qualifying employer and the employee now can be usefully employed for their normal days and hours, that direction will not have any effect from the beginning of 28 September 2020.

3.38 Schedule 2 also maintains the existing dispute resolution mechanism in the FWC, as well as the penalties for those who fail to comply with an FWC order dealing with a dispute, and for employers who knowingly purport to give a JobKeeper enabling direction when they are not authorised to do so. Fair Work Inspectors will also continue to be able to exercise their compliance powers under the Fair Work Act to investigate any suspected contraventions of Part 6-4C.

3.39 The employer payment obligations also continue to apply, including the obligation to satisfy the wage condition in section 789GD, the minimum payment guarantee in section 789GDA and the hourly rate of pay guarantee in section 789GDB.

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For instance, a qualifying employer must pay an employee in relation to whom they are claiming the JobKeeper payment the greater of the applicable JobKeeper fortnightly amount and the amount that is payable to the employee in relation to the work actually performed during the relevant fortnight (per the obligations in sections 789GD and 789GDA).

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Both qualifying employers and legacy employers must continue to comply with the hourly rate of pay guarantee which applies when a JobKeeper enabling stand down direction or a JobKeeper enabling direction regarding duties of work is given to an employee.

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Both qualifying employers and legacy employers also must continue to comply with their existing obligations under section 323 of the Fair Work Act to pay employees in full in relation to the performance of work. This includes any penalty rates, loadings, allowances etc., applicable to the work and hours performed by the employee.

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Failure to comply with the employer payment obligations attracts a civil penalty of 60 penalty units for an individual and 300 penalty units for a body corporate.

3.40 As is currently the case, giving a JobKeeper enabling direction does not amount to a redundancy, so does not disturb the ongoing employment relationship.

3.41 Retaining the repeal of section 789GJ (regarding annual leave arrangements) as scheduled on 28 September 2020 means that the normal arrangements for the taking of annual leave under the NES, or an applicable award, enterprise agreement or employment contract, will resume from 28 September 2020.

3.42 Continuing to provide employers with the flexibility to temporarily alter employees' working arrangements is reasonable, necessary and proportionate in the context of the continued extreme and dynamic economic impact of the Coronavirus pandemic on businesses and the economy. The measures have been extended for a fixed period until 28 March 2021 and are intended to support employers to maximise employee retention, and remain subject to a range of safeguards designed to minimise the impact on employees and the ability of parties to have disputes settled by the FWC.

3.43 The measure is compatible with and promotes the right to work.

Criminal process rights

3.44 The Parliamentary Joint Committee on Human Rights Practice Note 2 provides that civil penalty provisions may engage criminal process rights under Articles 14 and 15 of the International Covenant on Civil and Political Rights, regardless of the distinction between criminal and civil penalties in domestic law. When a provision imposes a civil penalty, an assessment is required as to whether it amounts to a criminal penalty for the purposes of the International Covenant on Civil and Political Rights.

3.45 Schedule 2 to the Bill extends temporary civil penalty provisions that were inserted on 9 April 2020 by the Coronavirus Omnibus Act. This means civil penalties will continue to apply from 28 September 2020 where:

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an employer fails to comply with the employer payment obligations in Division 2 of Part 6-4C;

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a person fails to comply with an FWC order dealing with a dispute about the operation of Part 6-4C;

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an employer fails to consider or unreasonably refuses a request from an employee who is working reduced hours under a JobKeeper enabling stand down direction for secondary employment or training; or

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an employer purports to give a JobKeeper enabling direction where they know the direction is not authorised by Part 6-4C.

3.46 The existing maximum civil penalty for contravening these requirements will continue to apply (60 penalty units for an individual and 300 penalty units for a body corporate). A higher penalty will continue to apply to:

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employers who purport to give a JobKeeper enabling direction where they knew the direction was not authorised by Part 6-4C; and

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'serious contraventions' (defined in section 557A of the Fair Work Act) of the requirement to satisfy applicable JobKeeper Payment Rules.

3.47 This reflects the more serious nature of these contraventions.

3.48 Schedule 2 to the Bill also creates eight new civil penalty provisions, which relate to:

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requirements for legacy employers to notify employees as to whether JobKeeper enabling directions or agreements will cease or continue on the basis of whether the employer has obtained a new certificate that it has satisfied the 10% decline in turnover requirements for the relevant quarter; and

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the operation of the 10% decline in turnover test and the statutory declarations that may be made for small business employers.

3.49 Contravening these requirements attracts a maximum civil penalty of 60 penalty units for an individual and 300 penalty units for a body corporate.

3.50 As is currently the case, these civil penalty provisions create pecuniary penalties in the form of a debt payable to the Commonwealth or other person and do no impose criminal liability or create a possibility of imprisonment.

3.51 These penalties are intended to encourage compliance with the extended flexibility measures in the Fair Work Act, which supports the implementation of a number of Australia's obligations under international law, and will only apply to a defined class of persons who remain or were previously within the JobKeeper scheme. While the Fair Work Ombudsman has enforcement powers, proceedings may also be brought by an affected employee or employee organisation. These factors all suggest that the civil penalties imposed by the Fair Work Act are civil rather than criminal in nature.

3.52 The severity of the relevant civil penalties should be considered low. They are pecuniary penalties (rather than a more severe punishment like imprisonment) and there is no sanction of imprisonment for non-payment of penalties.

3.53 As the proposed new civil penalties may reasonably be characterised as not being criminal in nature, the specific criminal process guarantees in Articles 14 and 15 will not apply. In any event, however, new civil penalties comply with the requirements of Articles 14 and 15 in that they would not apply retrospectively (Article 15(1)), the normal standard of proof applies (Article 14(2)), and there is no risk of double punishment as there is no comparable criminal penalty (Article 14(7)).

3.54 On this basis, the extended and proposed new penalties should not be considered criminal for the purposes of human rights law. In any event, they continue to comply with requirements of Article 14 and 15 of the International Covenant on Civil and Political Rights.

Conclusion

3.55 Schedule 2 to the Bill is compatible with human rights.