Employment implications of the 2022-2023 budget

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With the federal election around the corner, what does the 2022-2023 federal budget tell us about the priorities of the two major parties in relation to workplace relations and employment issues?

The Coalition announced its 2022-23 budget in March 2022 ─ its third budget handed down during the pandemic, and following a long period of upheaval for Australia's employers and workforces.

The most notable implications of the budget for employers include:

  • amendments to the taxation arrangements for employee share schemes
  • plans to change the redundancy payment calculation under the National Employment Standards in consultation with key stakeholders
  • amendments to the paid parental leave scheme
  • further funding to go towards the Fair Work Commission and the Fair Work Ombudsman

Opposition Leader Anthony Albanese responded to the Coalition's budget in his reply speech by outlining several priority policies that would have implications for employers should the Labor Party form government after the May election. These policies include:

  • a government-funded wage increase for aged care workers at federally subsidised aged care homes
  • reducing the cost of childcare to help increase female participation in the workforce
  • implementing all recommendations from the Respect@Work report to prevent sexual harassment at work.

The Opposition also recently outlined its economic plan and budget strategy, which involves saving $5 billion over the next four years by cutting back Labor's use of consultants and cracking down on tax avoidance by multinational companies.

Employment aspects of the 2022-2023 federal budget

Low unemployment and the war for talent

With the unemployment rate falling to 4 percent and the reopening of interstate and international borders, skill shortages and the war for talent were at the forefront of the budget.

The Coalition has committed to supplementing Australia's workforce by relaxing some work restrictions for a range of visas and increasing country caps for work and holiday visas by approximately 30% in 2022-23.

The Coalition has also promised $2.8 billion, over a five-year period, towards upskilling apprentices via the Australian Apprenticeship Incentive Scheme. As part of the scheme, apprentices in occupations identified as experiencing a national skills shortage, such as aged and disability carers, agricultural technicians, and chefs, could receive up to $5,000 in cash payments across the first two years of their training and employers who take apprentices on could receive up to $15,000 in wage subsidies.

Wages and cost of living

The increasing cost of living was a significant focus of the budget, with the Coalition attributing the pandemic, the war in the Ukraine and extreme weather events for the rise in prices. To ease the cost of living, the Coalition has announced a temporary and targeted cost of living package, including one-off payments and tax offsets for eligible recipients and a temporary reduction in petrol prices.

Unions have criticised these measures, suggesting that if the Coalition is serious about addressing cost of living pressures, the focus needs to be on wage growth.

Employee share schemes

The Coalition's budget introduced changes to taxation arrangements for employee share schemes. These changes will enable participants to invest up to $30,000 per year for up to five years plus 70% of dividends and cash bonuses; or any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.

These amendments will particularly benefit unlisted start-up companies which will be able to offer their talent more significant equity incentives.

National Employment Standards

The Coalition has revealed its plans to make changes to the National Employment Standards in consultation with key stakeholders with the goal of ensuring "redundancy payments more fairly reflect the average working hours over the course of a person's employment" resulting in boosting redundancy payouts for women.1

It has also flagged plans to discuss extending unpaid leave entitlements to foster and kinship carers.

Enhanced paid parental leave

The Coalition has pledged $346 million over five years to establish its Enhanced Paid Parental Leave Scheme (Enhanced Scheme), with most of the funding to flow from 2023 to 2024. The current Paid Parental Leave Scheme allows 18 weeks of paid leave for primary carers and two weeks of paid leave for secondary carers.

The Enhanced Scheme will combine the two-week Dad and Partner Pay and the 18-week Paid Parental Leave, to create a single scheme of up to 20 weeks of fully flexible and shareable leave for eligible working parents. The Enhanced Scheme will allow single parents to take the full 20 weeks of leave, and two-parent households to share the 20 weeks leave in the way that suits them best, provided it is taken within two years of the birth or adoption of a child. The income test will also be expanded to include a household income threshold of $350,000 per year.

The Coalition intends for the changes to remove disincentives for fathers to take up parental leave by enabling them to take government paid parental leave in conjunction with employer-funded leave, in the same manner available to women.

Increased funding for the Fair Work Commission and the Fair Work Ombudsman

The Coalition has promised to support small businesses in relation to employment relations matters by providing $5.6 million over four years to create a dedicated small business unit in the Fair Work Commission. The unit will aim to assist smaller employers and their employees to navigate workplace disputes, including unfair dismissal and general protections applications.

With the increased number of COVID-19 related workplace claims, the Coalition has also committed to investing $2.7 million into the Fair Work Ombudsman to assist businesses and employees with COVID-19 workplace issues until 30 September 2022.

Key takeaways for employers

Employers should keep a close eye on the results of the election. If the Coalition is re-elected, employers should be aware that:

  • the paid parental leave scheme will likely change to enable single parents to take 20 weeks' leave and two-parent households to share 20 weeks' leave in the way that suits them best
  • the way to calculate redundancy payments may change, and redundancy payments may increase (noting that the changes to the National Employment Standards are subject to consultation with key stakeholders)
  • changes to taxation arrangements for employee share schemes will take place
  • the Fair Work Commission will have a dedicated small business unit to assist smaller employers with unfair dismissals and general protections applications; and
  • work restrictions for a range of visas will change in order to encourage international workers to return to Australia.

1 Australian Government, Budget Measures 2022-2023, Budget Paper No 2 (2022) 60

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