Changes to long service leave in Victoria for employers in community, cleaning and security industries

Employees in Victoria are entitled to take long service leave (LSL) after 7 years of continuous employment with one employer. LSL accrues at a rate of one week for every 60 weeks of continuous employment, and applies to full time, part time, casual and seasonal employees, apprentices and trainees (workers).

However, from 1 July 2019, the LSL rules have changed for workers in the community services, contract cleaning and security industries. Employers of these workers were required to register with the Portable Long Service Authority (Authority) before 30 September 2019, and are now liable to pay a quarterly levy to fund the scheme.

Read on to find out what these changes mean for your business, and how we can help you comply.

What has changed?

The Long Service Benefits Portability Act 2018 (Vic) (Act) entitles certain workers to accrue portable LSL based on their length of service within an industry, rather than their length of service with one employer.

The change affects workers whose predominant activity is to personally deliver or perform:

• Community services work, including the provision of training, employment support, financial support, goods, accommodation or home care for the assistance of vulnerable persons; community legal services; fundraising assistance for community groups; assistance to culturally or linguistically diverse communities; social and youth work; and drug and alcohol services (but excluding health or aged care work provided in a private residence);
• Cleaning work, meaning keeping premises and pools in a clean condition (but excluding waste removal, grounds keeping and gardening);
• Security work, including protecting, guarding or watching property; acting as a bodyguard or crowd controller; installing, servicing or repairing security equipment; and providing training in relation to private security.

For example, a cleaner who commences employment after 1 July 2019 in Victoria by Clean-O-Matic as a full time commercial cleaner for 5 years, and is then employed by MegaClean as a full time residential cleaner for another 4 years, will ordinarily be entitled to LSL after their first 2 years of employment with MegaClean.

It is important to note that:

• if a worker leaves the industry for more than 4 years, they will lose access to their accrued benefits;
• only the leave accrued after the Portable Long Service Scheme commenced on 1 July 2019 is portable Existing accrued leave with an employer will continue to sit with that employer.

Why does it matter?

The new Act matters because it requires employers to make significant changes to the way they record and fund LSL for certain workers. If an employer breaches any of the below requirements, it can be liable to pay a penalty of up to $19,826 and be guilty of a criminal offence.

Employers must register with Portable Long Service Authority

By 30 September 2019, businesses whose workers work in community services, contract cleaning or security were required to register with the Authority.

This includes businesses based outside of Victoria who employ those workers to work in Victoria.

The only exception to the 30 September deadline is for new businesses in those industries, which must register within 3 months of starting up.

Contact us for urgent advice if you have missed the deadline.

Employers must pay the levy

To fund the State-wide portable LSL scheme, registered employers must pay a quarterly long service benefits levy to the Authority. Employer levies paid are held by the Authority, and the Authority is responsible for administering the LSL when a worker applies to use it.

The levy is calculated as a percentage of the ordinary pay of each worker, and is currently:

• Community services: 1.65%;
• Contract cleaning: 1.80%;
• Security: 1.80%.

Unlike the current scheme, employers will not receive a refund of levy payments if a worker leaves their employment.

Employers must lodge quarterly returns

Within one month of the end of each quarter, employers must lodge a return with the Authority that contains the following information for each worker:

• name;
• total ordinary pay paid or payable for work performed in that quarter;
• number of days (or part days) during the quarter to which the pay relates;
• any long service benefits given to the worker under a Fair Work instrument during the quarter, including:
  • long service leave granted to, or taken by, the worker;
  • payments for, or in lieu of, long service leave made to the worker;
  • any other long service benefits paid or given to the worker;
  • the time at which the benefits were given;
  • the service period to which the benefits relate; and
  • the name of any other fair work instrument that provides for a long service leave entitlement that applies to a worker or workers;
• for each worker who ceased to be employed by the employer during the quarter – the date the worker ceased employment.

Employers must keep records

Registered employers must keep a record of the following information for each worker:

• name
• date of birth;
• nature of the work performed by the worker;
• the worker's ordinary pay for each quarter;
• the number of days or part days worked by the worker in each quarter;
• the date when the worker began service with the employer;
• long service benefits given to the worker under this Act, another Act, a corresponding law or a fair work instrument, including LSL granted to, or taken by, the worker; payments made for, or in lieu of, LSL; and any other long service benefits paid or given to the worker; and
• if the worker stops service with the employer—the date the worker stops service

Is portable LSL compulsory, and are there exemptions?

Compliance with the Act is compulsory for businesses whose workers work in community services, contract cleaning or security. Employers cannot contract out of the portable LSL entitlement, nor the obligations to register with the Authority, pay the levy, lodge returns and keep records.

However, there are some important exemptions to the Act for workers who:

• are covered by a federal award or workplace agreement where that award or agreement contains its own LSL provisions, including the Aged Care Award 2010;
• are provided with LSL entitlements under another Act or regulation, such as the CoINVEST scheme for workers in building and construction.

What next?

The Act brings in a number of changes that present complex challenges for employers. Even employers who do not generally operate in the community services, contract cleaning or security industries – but who employ some staff who predominantly carry out community services, contract cleaning or security work – must comply.

It is crucial that employers act now to understand which employees are affected by these changes, and how to avoid significant financial penalties. Consider especially whether an employee’s employment is covered by another Act, or a pre-2010 award or enterprise agreement that contains its own LSL provisions.

We would be pleased to assist in assessing how the Act affects you and your employees. Contact us to discuss your needs.