Update on long service leave in Victoria

There have been two significant developments recently affecting long service leave entitlements in Victoria. Below we examine what employers need to know.

Long service leave portability for certain industries

On 18 September 2018, the Long Service Benefits Portability Act 2018 (Portability Act) was enacted. The central aim of this legislation is to create a scheme whereby service within the contract cleaning, security and community services sectors (Covered Industries) is portable for the purposes of long service leave entitlements.

From 1 July 2019 – when the Portability Act will come into operation – workers in Covered Industries will be able to have their service recognised cumulatively across multiple employers, so that after seven years of working in one of the Covered Industries, they will be entitled to long service leave.

Key provisions of the Act include:

  • a Portable Long Service Leave Authority (Authority) will keep up-to-date registers of employers and workers for each of the Covered Industries;
  • registered employers and contract workers must provide a quarterly return providing details of their workers to the Authority;
  • employers and contract workers must pay a levy when they submit the quarterly return, which must not exceed 3% of the employee’s ordinary pay and which will vary between Covered Industries; and
  • workers with up to 12 months’ service in a Covered Industry prior to the Portability Act coming into operation will have the right to have that service recognised for the purpose of calculating their long service benefit.

Commencement of new Long Service Leave Act

On 1 November 2018, the new Long Service Leave Act 2018 (Vic) (LSL Act) commenced operation, replacing the Long Service Leave Act 1992, and introducing wide-ranging amendments in Victoria.

The prominent changes contained in the LSL Act have been outlined in a previous hot topic, and in summary include the following:

  • employees are now entitled to long service leave after seven years of service;
  • if agreed between an employer and employee, long service leave may be taken in multiple periods of one day or more;
  • long service leave will accrue on unpaid parental leave for the first 52 weeks and unpaid parental leave of up to 104 weeks will not break continuity of service; and
  • new methods to calculate long service leave where there is a change of hours over the period of employment.

In addition to these changes, penalties have also been amended so that particular breaches of the LSL Act will give rise to a criminal penalty, and civil penalties have increased to 60 penalty units (which currently equates to $9,671.40).

Lessons for employers

With the commencement of the Portability Act and following the recent implementation of the LSL Act, employers should consider undertaking the following steps:

  • prepare for the administrative obligations that will be required to comply with the Portability Act, such as providing information and training for staff;
  • be aware of costs that will be incurred as a result of compliance with the Portability Act;
  • ensure long service leave policies, practices and payroll systems are consistent with the new long service entitlements and requirements under the Portability Act and LSL Act; and
  • review reporting processes to guarantee the new reporting requirements and levy payments under the Portability Act can be met.

If you would like further information or advice about how this legislation impacts you or your business, please contact our Employment, Safety and Migration team at Macpherson Kelley.

 This article was written by Barney Adams, Associate – Employment, Safety and Migration and Stella Gehrckens, Law Graduate – Employment, Safety and Migration.