Wednesday, 4 November 2020

Changes to Victorian Portable Long Service Leave for Community Services Sector

On 1 October 2020, the Long Service Benefits Portability Regulations 2020 (the Regulations) came into operation, revoking the Long Service Benefits Portability Interim Regulations 2019 (the Interim Regulations).  The Regulations are made under the Long Service Benefits Portability Act 2018 (the Act) (together, the Scheme).

The Regulations have broadened the scope of community service sector employees who will now be covered by the Scheme which we discuss below.

The Scheme

As discussed in our previous article (which can be read here), the Scheme entitles an individual in a covered industry (being the community service sector, the contract cleaning industry and the security industry) to long service benefits under the Scheme if they perform work for a registered active employer and are a registered active worker.

If an employer falls within a covered industry, it must apply to the Portable Long Service Leave Authority (the Authority) in an approved form for registration as an employer in a covered industry within 3 months of becoming covered by the Scheme.  Given the Scheme commenced from 1 July 2019, businesses employing workers at that time in community services, contract cleaning and security and businesses employing workers who perform work covered by the Scheme were required to register by 30 September 2019.

Initially, the Scheme covered prescribed community service sector employers including employers who were non-profit entities that employed one or more individuals to perform community service work.  ‘Community services work’ included:

  • social work, welfare work and youth work services;
  • social and community development, education and advocacy;
  • crisis counselling;
  • assessment of individual or family needs;
  • neighbourhood houses;
  • family support services;
  • youth services; and
  • housing and homelessness services.

Further, since 1 January 2020, entities funded by the National Disability Insurance Scheme and licensed children’s service entities that are not schools, fall within the definition of the community services sector.

Employees in the health or aged care work, or employees whose ‘predominant activity’ of their substantive role was not the personal delivery of service or the personal performance of activities that were community service work, were not covered by the Scheme under the Interim Regulations.  In other words, it was unlikely that administrative, marketing and other office-based staff in the community service sector were covered under this Scheme.

The New Regulations

The Regulations revoke the Interim Regulations and have expanded the Scheme’s coverage of the community service sector, effective from 1 October 2020.

In particular:

  1. The Regulations removed the carve out of health or aged care work from the definition of community services work, meaning employers engaged in health or aged care work may now be considered as part of the community service sector under the Scheme, which may enliven obligations on the employer to make long service contributions to the Authority.
  2. As set out above, under the Interim Regulations, an individual was not considered to be an employee for the community services sector, and therefore not entitled to long service benefits under the Scheme if the ‘predominant activity’ of the individual’s substantive role was not the personal delivery of service or the personal performance of activities that constituted community service work. This is not a feature of the new Regulations, and an employee (including a casual employee) in the community sector will be now be covered by the Scheme if they are “employed under” one of the following awards:
  • the Social, Community, Home Care and Disability Services Industry Award 2010;
  • the Children’s Service Award 2010;
  • the Educational Services (Teachers) Award 2010;
  • the Labour Market Assistance Industry Award 2020;
  • the Supported Employment Services Award 2020.

This means that employers relying on the predominant activity carve out in the Interim Regulations to avoid making long service benefit contributions to the Authority may now be required to make levy contributions to the Authority.

Of note, the Regulations also provide that an individual is taken to be employed under one of the above awards even if an enterprise agreement or an agreement based transitional instrument applies to the individual or their workplace. That is, provided the relevant modern award covers the employee’s employment, they will be within the scope of the Scheme.

What employers should do

Employers in the community service sector that relied on one of the exclusions in the Interim Regulations should consider the changes made to the portable long service benefits scheme as the introduction of the Regulations may now mean:

  1. Employers who were not registered with the Authority may now need to make an application to be registered with the Authority; and
  2. Employers in the community service sector are obligated to make payments to the Authority for each of their employees in the community service sector.

If it is determined that a community services sector employer has one or more employees now covered by the Scheme, the employer must register the employee with the Authority by 1 January 2021 (being 3 months from the commencement of the Regulations) and commence quarterly reporting and paying the appropriate levy for those employees.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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