Victoria’s new Portable Long Service Leave Benefits scheme for the community services, contract cleaning and security industries commenced on 1 July 2019. If you are an employer having employees in any of these three industries, you will need to participate in the scheme on behalf of your employees.

Businesses that are required to participate have until 30 September 2019 to register as employers with the Portable Long Service Authority.

Independent contractors in the contract cleaning and security industries can participate in the scheme on their own behalf.

How Portable Long Service Leave works

Ordinarily, an employee is entitled to receive long service leave after seven years continuous service with one employer. From 1 July 2019, employees in the community services, contract cleaning and security industries will be entitled to receive long service leave after seven years working in their industry under the Long Service Benefits Portability Act 2018 (Vic), even if they have changed employers within that time.

Under the scheme, employers of those in the covered industries must make contributions to the Portable Long Service Authority on behalf of their employees. After completing seven years of continuous service in the industry, it is the Portable Long Service Leave Authority, not the current employer, who will pay the employee when they take long service leave.

The rationale behind portable long service leave is that employees in the community services, contract cleaning and security industries frequently change employers due to the nature of these industries. Accordingly, these employees are disadvantaged in comparison to those in other industries if they have to work seven continuous years with one employer to obtain long service leave.

The scheme also provides independent contractors in the contract cleaning and security industries with long service leave to which they otherwise would not have access.

What you are required to do

Employers of those in the community services, contract cleaning and security industries are required to make quarterly contributions to the Portable Long Service Authority for each employee that carries out community service, contract cleaning or security work. The current contribution rates for each employee are:

1. For the community services industry, 1.65% of each employee’s ordinary pay
2. For the contract cleaning industry, 1.8% of each employee’s ordinary pay, and
3. For the security industry, 1.8% of each employee’s ordinary pay.

What about employees’ entitlements under existing long service leave laws?

The scheme operates from 1 July 2019, and accordingly an employees’ period of service is calculated from 1 July 2019 (though some workers may apply to have their period of service calculated from 1 July 2018).

An obvious question that arises is how the new scheme operates with existing long service leave laws, and in particular the Long Service Leave Act 2018 (Vic). Two common situations that will arise are:

• Where an employee already has over seven years of service with their existing employer, and are therefore already entitled to long service leave under the Long Service Leave Act 2018, whereas it will be seven years before they are entitled to portable long service leave.
• Where an employee has less than seven years of service with their existing employer, but continues to be employed until they have worked for seven years. For example, if as of 1 July 2019, an employee has four years of service with their employer, they will be entitled to long service leave under the Long Service Leave Act 2018 in 2021, but would only be entitled to portable long service leave in 2026.

In both of these cases, the employer would be required to make portable long service leave contributions and pay long service leave under the existing long service leave law, effectively allowing the employee to ‘double-dip’.

To address this, the Long Service Benefits Portability Act 2018 provides that, for the contract cleaning and security industries, an employee can elect to receive their long service leave from their employer under the Long Service Leave Act 2018, and the Portable Long Service Authority will reimburse them for that portion of that employee’s long service leave that accrued after 1 July 2019.

However, for employees in the community services industry, neither the Long Service Benefits Portability Act 2018 nor the Long Service Benefits Portability Regulations 2019 have an equivalent provision allowing an employer to be reimbursed from the Authority for long service leave taken under the Long Service Leave Act 2018.

The Regulations only have provisions to prevent employees double-dipping where they have taken long service leave under the federal Fair Work Act 2009 (Cth), but only a limited number of employees in Victoria will have their long service leave provided for under federal law.

We have spoken with the Authority, and they have advised that they intend to address this anomaly. This is therefore an area to be monitored closely in the future.

How can Sharrock Pitman Legal assist me?

It is essential that employers familiarise themselves with the new Portable Long Service Leave Benefits scheme and understand their obligations. We also recommend that employers review their employment contracts and existing long service leave policies. If you would like further advice on portable long service leave and how it affects your business, then please do not hesitate to call our Managing Principal, Mitchell Zadow, on (03) 8561 3318 or, alternatively, fill in the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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