Commencing 1 July 2020, the Queensland State Government will proceed with extending portable long service leave (PLSL) to the Social and Community Services sector.
Last year, the Office of Industrial Relations (OIR) issued a discussion paper on which BDO lodged a submission with a series of issues for consideration. The State Government has recently released the decision document outlining the decision and reasoning.
Draft legislation is currently being designed which is scheduled to be tabled in Parliament before the end of the year and finalised in early 2020. Key operational components of the scheme will be contained in the regulations, which will be released after the legislation is finalised.
Key aspects of the scheme
Key aspects as presently contained in the scheme include:
- Applies to employers / employees in the Social and Community Services sector, private and NFP (but not government)
- The scheme will be administered by QLeave who currently manage the PLSL schemes for the Building & Construction industry and the Contract Cleaning industry sector
- Start date to pay the contribution levy – 1 July 2020
- Employees can only claim Long Service Leave (LSL) from the scheme for service after that date
- Levy is likely in the range of 1.3% to 1.6% (13 weeks after 15 years equates to 1.6667%)
- LSL is payable to the employee sooner – 6.1 weeks after 7 years (so still based on 13 weeks entitlement for 15 year service)
- LSL entitlement is paid based on the wages / salary at the date of taking the LSL, without a cap on the salary
- The OIR has sought advice on how to deal with employers and employees with FBT exempt salary packaging in place and is yet to really develop a response to this question.
Note: The scheme does not remove the responsibility / liability of the employer to pay LSL.
If an employee takes long service leave and the employer pays the employee their LSL, the employer should be entitled to claim back some funds from the scheme.
Definition of the sector
A major topic of discussion at present is the definition of the sector. A significant issue will be identifying if an organisation is included in the scheme. At present, the Social and Community Services sector is considered to include but not limited to:
- Aboriginal and Torres Strait Islander community services
- Accommodation support
- Advocacy services
- Alcohol and other drug support services
- Child safety and support
- Community development
- Community education
- Community health services
- Community legal services
- Counselling services
- Disability emergency response
- Disability support
- Employment services
- Family and domestic violence services
- Financial counselling
- Foster care and out-of-home care
- Home and community care
- Homelessness support
- Lesbian, gay, bisexual, transgender, intersex or queer services
- Mental health services
- Migrant and multicultural support services
- Offenders transitioning services
- Seniors community support services
- Social housing
- Violence prevention services
- Women’s services
- Youth justice services
- Youth support services.
Excluded services from the scheme include general health services, childcare and aged care.
Impacts for organisations
Organisations that are predominately operating in the Social and Community Services sector are within the scheme and are required to register. The current discussion paper suggests that all employees of that organisation are included in the scheme and the levy must be paid on all wages including those whose tasks are not in the definition of the sector. Interstate organisations with employees in the Queensland sector will be required to register and pay the levy on the Queensland employees. The OIR is still defining what registration requirements will apply. The OIR suggests that they will likely recognise branches that have separate ABNs however, how this works with large organisations will be a work in progress.
Another key impact for organisations is that they will be required to pay LSL on service of all employees from day 1 of the scheme. There will also be significant accounting questions on the extent to which the payments made to the LSL scheme can be offset against future amounts that would otherwise be recognised as increases to a provision for LSL. There is also the possibility and concern that employers could inadvertently be required to pay some LSL twice – once in the form of the levy and then to satisfy their liability as an employer. Consequently, employers impacted by the scheme will need to understand the mechanics to minimise the risk to them.
Keeping you informed
BDO is working closely with the OIR to keep you informed of updates as further information on the legislation is released.
Please contact us should you have any queries or concerns related to the extension of portable long service leave to the Social and Community Services sector.