The recent decision in the Hitachi Construction Machinery (Australia) Pty Ltd v Coal Mining Industry (Long Service Leave Funding) Corporation case has sent shockwaves through the contracting sector of the black coal industry.
The implications for contractors supporting the black coal industry are significant after the Full Federal Court of Australia upheld the earlier decision that certain Hitachi employees qualify for long service leave entitlements under the Coal Mining Industry Long Service Leave (LSL) Scheme.
The recent Court ruling emphasised that determining whether an employee is “eligible” under the Coal LSL scheme depends on the location and nature of the work performed, as well as the extent to which that work is connected to the day-to-day operations of a coal mine – rather than whether the employer’s primary business is classified as black coal mining
What the Ruling means to contractors supporting the black coal industry
This landmark ruling confirms that employees working on black coal mine sites – regardless of whether their employer’s primary business is coal mining, are eligible for the Coal LSL scheme. This includes contractors who perform essential maintenance, repair, or support tasks at mine sites.
The court’s interpretation of the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) means that eligibility is determined by the nature of the work performed rather than the primary business of the employer. This decision has far-reaching consequences for contractors who previously may not have considered themselves liable under the Coal LSL scheme.
The expansion of the scope of the Coal LSL scheme to include contractors working on black coal mine sites, even when coal mining is not the primary business of their employer, was largely an unintentional consequence of the legislative wording during the 2010 award modernisation process which was aimed to simplify and modernise industrial awards, including the Black Coal Mining Industry Award 2010.
During this process, there was an intention to cover employees who were directly involved in coal mining operations, however the wording of the legislation appears to have inadvertently extended the scope to include contractors who perform ancillary or support work on mine sites.
This led to an Independent Review of the Coal LSL Scheme in 2021 where KPMG recommended that “the Commonwealth amend the definition of eligible employee through legislative reform to reduce ongoing uncertainty“. The Australian Government’s response to the review in February 2022 agreed that it:
“will bring forward amendments as part of a legislative package to provide greater clarity about when an employee is covered by the Coal LSL Scheme – this is in the interests of employees and employers.
The Government remains committed to the statement in the original terms of reference that it is not within scope to consider any proposal that would result in a reduction in the long service leave entitlement
of eligible employees“.
There has been ongoing debate and lobbying from affected industries to address this perceived legislative overreach . However, to date, no substantial changes have been made to the legislation to explicitly narrow the scope back to its original intention.
Given that the Full Federal Court upheld the interpretation that employees performing work integral to black coal mining operations are covered by the scheme, the Industry’s prospects of overturning the decision on legal grounds are slim – this is now a matter for legislative reform rather than judicial interpretation.
This ruling impacts hundreds, potentially thousands of employers which do not consider themselves to operate primarily in the coal mining industry, who are now at risk of receiving claims notices by Coal LSL due to their provision of a service to a coal mine
Which contractors are affected?
If you are a contractor or service provider operating in or around black coal mine sites, you may now find yourself subject to the Coal LSL scheme. This includes industries such as:
- Heavy machinery maintenance and repair
- Electrical and engineering services
- Site support and logistics
- Safety and compliance services
The ruling highlights the importance of correctly identifying your employees’ eligibility and ensuring compliance with the scheme’s requirements. Failing to do so could result in unexpected liabilities, including back payments and penalties.
Key considerations
Being Coal LSL specialists we’re acutely aware of industry developments and its important that you are.
Given the outcome of the ruling and its implications, it’s essential to seek professional advice to assess your specific situation and how you should act.
Book a video call with us to help you understand the ruling’s impact on your operations and guide you through your obligations under the Coal LSL Scheme.
Together, we’ll navigate these changes and ensure you’re fully informed and prepared so that you minimise the risk of non-compliance and costly penalties.