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Insights

Workplace Relations Alert

Update: Long Service Benefits Portability Scheme Passes Parliament

| Published by Libby Pallot, Anthony Massaro, Abbey Burns, Ben Tallboys, Caitlin Walsh

On 4 September 2018, the Long Service Benefits Portability Bill 2018 (Bill) was debated in the Legislative Council Committee and approved by an absolute majority. The intention of the Bill is to create a scheme which enables employees’ long service leave to accrue despite a change in employment within the same sector.

Russell Kennedy previously provided insight on an earlier draft of the Bill, which remains largely unchanged.

THE UPDATED BILL

Commencement

The legislation will commence on 1 July 2019, rather than 1 April as previously indicated.  The legislation establishes the Portable Long Service Benefits Authority (Authority) to administer the Long Service Benefits Portability Scheme (Scheme).  In the 2018 Federal Budget, $8.2 million was committed to fund the initial administration of the Scheme.

Scope of the Scheme

The Scheme covers the:

  • Community Services Sector
  • Contract Cleaning Industry
  • Security Industry

Community service work includes training and employment support for persons with a disability, financial, accommodation or home care support services for persons, community legal or education services, and other support services for persons with a disability or who are vulnerable, disadvantaged or in crisis, amongst other things.

However, there is still some uncertainty as to precisely what is included within the community services sector.

Subject to the regulations, community service work does not include:

  • activities funded by the NDIS;
  • services provided by entities licensed under the Children’s Services Act 1996; or
  • services provided by approved providers under the Education and Care Services National Law (Victoria).

Further, the scheme does not apply to:

  • licensed children’s service or approved provider workers (unless they are caring for children or coordinating the care of children);
  • community health centre workers (unless they are carrying out community service work at the community health centre);
  • workers whose primary role is to provide health services to persons with disabilities;
  • workers to whom the Aged Care Award 2010 applies;
  • workers to whom prescribed awards or enterprise agreements apply; or
  • any other workers who are prescribed not to be covered by the scheme.

As the regulations are yet to be introduced, there remains some uncertainty as to the coverage of the scheme.  However, the Government has indicated that the long term goal of the scheme is to apply to all community service workers.

The Bill defines cleaning within the contract cleaning industry to mean work that is intended to bring a premises into a clean condition, and includes cleaning swimming pools.  It does not include commercial waste removal, grounds keeping, cleaning on construction sites or gardening activities.

The security industry is that which falls under the scope of the Private Security Act 2004.  It includes activities such as protecting, guarding or watching property of people, installing security equipment and providing security training, amongst other things.

Employer responsibilities

Levy

Employers will be required to pay a levy to the Authority each quarter to fund the Scheme.  The governing board of the Authority will determine the levy, but it is to be capped at 3%.

The opposition questioned in Committee whether employers who had contributed to the fund would receive a refund when employees left their employment for another sector, before an entitlement to long service benefits arose.  It was confirmed that these amounts would be retained by the Authority and used to ensure the levy was reduced for all employers.

As Russell Kennedy advised in our previous Insight, the long service leave benefits for employees will remain the same.  Where an employee accrues an entitlement under both an enterprise agreement and the Scheme, the legislation will prevent any ‘double dipping’ by employees.  The Government intends to regulate to ensure that if an employee elects to claim their benefits under an enterprise agreement, the Authority will reimburse the employer any amount paid to the Authority under this scheme in relation to that employee.  The main change for employers is an obligation to begin contributing to an employee’s long service leave benefit from the first day of their employment.

Register

The Authority is required to maintain an up-to-date register for each of the industries covered by the Scheme.  Employers will therefore be required to lodge a return with their levy which will include details about the individual work completed for the employer during the quarter, amounts paid to the employee and their leave entitlements.  This information is the same as information employers are required to keep under other employment legislation and is not intended to create an additional burden for employers.  The government anticipates that all information will be submitted in an electronic form.

Compliance mechanisms

The Bill empowers authorised officers to require information or documents, and to retain those documents for as long as necessary to monitor compliance with the legislation.  It is an offence to fail or refuse to provide an authorised officer information or documents without reasonable excuse, or to fail to keep proper records.

Dispute resolution

A person affected by a decision of the Authority may have that decision reviewed at VCAT.  A decision may be the Authority’s refusal to payout a long service benefit, failure to register a person as an employee for a covered industry, or a decision in relation to the service for which an employee is entitled to be credited long service benefits.

Key takeaways

Employers in the relevant sectors will be required to contribute towards the long service leave benefits of their employees from the first day of employment, and from the day that the scheme commences.  For smaller businesses, this may present a cash flow issue. 

To enable the Authority to maintain its register, the Bill includes additional reporting requirements. This means that employers will have to make quarterly reports on their employees’ hours of work and pay, and leave entitlements.  Although this is information employers will likely have at hand, it is nonetheless an increased administrative burden.

Please contact Russell Kennedy’s Workplace Relations, Employment and Safety Team for advice about your potential obligations under the scheme (including whether the Bill will apply to your business).

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