Effective 1 October 2020, more employees working in the community service sector will need to be registered with the Victorian Portable Long Service Authority (Authority). The Long Service Benefits Portability Regulations 2020 (Vic)(New Regulations) expand (and clarify) which community services sector employers need to register for benefits under the Scheme.
The Long Service Benefits Portability Interim Regulations 2019 (Vic) (Interim Regulations), which operated from 20 November 2019 to 30 September 2020, required employers to register workers (and contribute the 1.65% levy) for employees whose predominant activity is the personal delivery of community services. Under the New Regulations, operative from 1 October 2020, the pre-dominant activity test no longer applies, meaning that an employee’s eligibility for the Portable Long Service Leave Scheme (Scheme) is determined by Award coverage.
Given that the reforms are only recent, it is worth a recap on its key elements of the Scheme.
A recap on Scheme – What is it?
Put simply, there are three key features of the Scheme:
- An employer in the “community services sector” with at least one eligible employee must register itself with the Authority.
- A registered employer must register with the Authority each employee who is performing “community service work”.
- Every quarter, the registered employer needs to provide the Authority with information about the registered workers’ service, any long service leave taken and pay to the Authority. The levy for the community services sector is 1.65% of “ordinary pay”. NB: As a reminder, the Victorian LSL entitlement is 13 weeks after 15 years of service, which works out to 1/60th of an employee’s length of service (a little over 1.65%).
Step 1: Does my business provide “community service work” and does it need to register?
Coverage for employers is largely determined by whether the organisation provides community service work in the community services sector. Schedule 1 of the Long Service Portability Act 2018 (Vic) and the New Regulations define the term “community service work”.
Since 1 January 2020, entities funded by the National Disability Insurance Scheme and entities licensed children’s service entities that are not schools are covered by the community services sector.
Generally speaking, an employer in the community services sector is only required to register when it has one or more employees performing community service work.
Organisations operating in multiple states and territories may still be caught by the Scheme.
Step 2: Which employees perform “community service work”?
The Interim Regulations covered workers engaged in a role with the predominant activity being personal delivery of services. However, the pre-dominant purpose test no longer applies.
When a business is covered by the community services sector, it is likely that it will have employees doing “community service work”. The main change under the New Regulations is that a business is only required to register employees (and pay the levy for employees) who are covered by one of these Awards:
- Social, Community, Homecare and Disability Services Award 2010 (“SCHADS Award”);
- The Children’s Services Award 2010;
- The Educational Services (Teaches) Award 2010;
- The Labour Market Assistance Industry Award 2020; and
- The Supported Employment Services Award 2020
Employers should now review relevant Awards to confirm whether their workers are Award-covered, as coverage may trigger the obligation to register the worker with the Authority. Determining Award coverage is particularly challenging for two types of employees:
- Senior employees, because many employers do not typically think of members of the management team as “Award-covered” employees. However, the SCHADS Award, for example, extends to senior leaders and managers within an organisation.
- Employees in hybrid roles, who are not directly involved in the “community service work” of an organisation.
The test for Award coverage is whether an employee is substantially engaged in the duties of the classification.
Step 3: Quarterly reporting and paying the levy
Within one month of the end of each quarter, a registered employer must update the Authority as to how many days the employee has worked, their ordinary pay for that period and LSL taken by the registered employee or any payment in lieu of LSL to the employee.
The levy is calculated on an employee’s “ordinary pay”. Ordinary pay is essentially, the employee’s wage excluding overtime pay, reimbursements, payments for using employee’s own material, equipment and motor vehicle, allowances, amounts paid on cessation of employment, and superannuation contributions. Importantly, “ordinary pay” does include casual loading.
How we can help
Given the changes to eligible employees and the penalties associated with failing to register / pay the levy, employers should consider whether employees are covered by one of the modern awards above.
If you’d like advice on whether the Scheme applies to you and your workforce, and how it interacts with long service leave entitlements generally, please do not hesitate to contact us.