Fair Work; public sector; tax ruling


Fair Work; public sector; tax ruling

Fair Work Act Amendment Bill passes through Parliament | Public sector legislation through Parliament | Other workplace legislation through Parliament | Tax ruling: employment termination and legal costs.


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Fair Work Act Amendment Bill passes through ParliamentPublic sector legislation through Parliament | Other workplace legislation through Parliament | Tax ruling: employment termination and legal costs.

Fair Work Act Amendment Bill passes through Parliament
Minister for Employment and Workplace Relations, Bill Shorten, has welcomed the passage of the Fair Work Amendment Bill 2012 through the Parliament on 28 November despite Coalition and employer claims that the changes are of little consequence.
Shorten said that the Act implements a number of recommendations from the independent Fair Work Act Review, and other changes arising from the Minister’s consultation with stakeholders.

The Act also implements the Federal Government’s response to the Productivity Commission’s inquiry into default superannuation in modern awards, which was initiated by the government in January 2012.

Fair Work Commission
With the passing of this legislation, Fair Work Australia will now be renamed the Fair Work Commission.

Structural amendments to the Fair Work Commission contained in the Bill include the creation of two vice president positions. The criteria for appointment of vice presidents will be the same as for the president of Fair Work Act 2009 and are set out in the legislation. This move has generated opposition, as reported in a previous WorkplaceInfo article.
Unfair dismissal
The Act also changes the unfair dismissal application process and hearing process by:
  • aligning the time frames for making unfair dismissal claims and general protections dismissal claims at 21 days
  • implementing the review recommendations relating to costs orders where a party to an unfair dismissal matter has caused the other party to the matter to incur costs by an unreasonable act or omission. This recommendation reflects concerns that unscrupulous lawyers or agents are encouraging dismissed employees to pursue unfair dismissal claims without merit on a no-win, no-fee basis
  • providing the Fair Work Commission with discretion to dismiss applications in certain circumstances, such as when the applicant, without any reasonable explanation or excuse, fails to attend a hearing or comply with an order made by the Commission or has failed to discontinue an application after a settlement agreement has been concluded.
Default superannuation arrangements
The Act changes default superannuation arrangements. A new Expert Panel will impact on the selection of default funds in modern awards.

Technical changes
Finally the Act implements several technical and clarifying recommendations made by the Fair Work Act Review, including:
  • prohibiting opt-out clauses in enterprise agreements
  • clarifying that statutory enterprise agreements cannot be made with a single employee
  • clarifying notification requirements for scope order applications
  • clarifying what may be included in a notice of representative rights to employees
  • prohibiting an individual union official being a bargaining representative of an employee where the union does not have coverage
  • clarifying when a modern award variation application can be struck out and who can apply for a modern award to be varied
  • clarifying how protected action ballots can be conducted, while preserving the existing strict requirements and processes around when protected industrial action can be taken.
Ai Group comments
‘Now that the government’s first tranche legislative response to the Fair Work Act Review has passed through Parliament, it is time to focus on the most important issues,’ Australian Industry Group (Ai Group)chief executive Innes Willox has said.

During the Fair Work Act Review the big priorities were widely identified by Ai Group and other major industry representatives, according to Willox. They included:
  • more tightly defining the issues that can be the subject of bargaining claims
  • stopping unions holding employers to ransom over greenfields agreements for new projects
  • implementing a more effective framework for Individual Flexibility Arrangements
  • fixing the general protections laws
  • implementing more workable transfer of business laws.

Public sector legislation through Parliament
State public sector workers whose jobs are outsourced to employers in the national workplace relations system can seek the protection of their working conditions via a Bill that passed Federal Parliament on 27 November. See: Ex-public servants on same pay will be unemployable: Abetz
The Fair Work Amendment (Transfer of Business) Bill 2012 extends the benefits of the existing transfer of business provisions under the Fair Work Act 2009 to certain former state public sector employees who move into the national system through a transfer of business — assuming they can obtain the relevant positions.

Other workplace legislation through Parliament

Tax ruling: employment termination and legal costs
A technical ATO ruling on the assessability of amounts received to reimburse legal costs incurred in disputes concerning termination of employment has been released.

What this Ruling is about
This Ruling is about whether or not amounts received to reimburse legal costs incurred in disputes concerning termination of employment are included in assessable income either:
  • because they form part of an employment termination payment (ETP) within the meaning of s82 130 of the Income Tax Assessment Act 1997 (ITAA 1997); or
  • as an assessable recoupment under s20 20, where the legal costs are deductible under s8 1.
This Ruling does not consider the goods and services tax (GST) and capital gains tax (CGT) consequences of amounts received in respect of legal costs in disputes concerning termination of employment.

The Ruling does not apply to legal costs incurred prior to termination, because these are not legal costs incurred in disputes concerning termination of employment.

This Ruling applies to both a court ordered award of identified and particularised legal costs and the specified or identifiable amount in relation to professional legal costs included in a dissected settlement sum paid in respect of termination of employment. ‘Professional legal costs’ are amounts that can be included in a legal practitioner’s bill of cost which includes amounts incurred both before and after commencement of litigation.

Fringe Benefits Tax
A reimbursement of legal costs incurred in a dispute concerning termination of employment will not have a sufficient or material connection to the former employment to fall within the meaning of ‘fringe benefit’ in s136(1) of the Fringe Benefits Tax Assessment Act 1986.
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