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Portable long service leave will increase employment costs

Submitted on Friday, 28th April 2017

The Victorian Chamber is opposing a Victorian Government proposal to impose a portable long service leave scheme on the cleaning and security sectors. Such a scheme will increase the cost of labour without delivering any corresponding increase in productivity. It will also result in additional indirect administration costs and red tape for employers. These additional costs will discourage employment.

The Victorian Government is investigating the feasibility of establishing a scheme that would recognise a worker’s service with multiple employers in the contract cleaning and security industries rather than just one employer.

Similar schemes currently operating in other states enable eligible workers to accumulate paid long service leave entitlements when they record 10 years of service within a sector irrespective of how many employers they have worked for.

These schemes are funded by levy payments made by employers that are pooled into a central fund that pays long service entitlements to workers. The levy rates range from 1.0% to 1.7% of gross wages.

Victorian Chamber members have told us that they already face significant challenges competing with firms that engage workers through sham contracting arrangements. Portable long service leave will further widen the competitive disadvantage of compliant employers.

Further details on the study, including recently released discussion papers, are available on the following website http://www.acilallen.com.au/PLSLDesignStudy.

Should the Government decide to proceed with such a scheme, the Victorian Chamber submission (available here) urges a focus on minimising scheme costs and the administrative burden on employers by:

  • Designing the scheme to keep financial and administrative costs as low as possible.
  • Providing Government funding for all scheme start up and ongoing administrative costs rather than forcing employers to fund these costs through levy payments.
  • Ensuring that conditions and benefits for workers do not exceed those available under the Victorian Long Service Leave Act 1992.
  • Implementing a robust a governance model where any scheme is administered by a statutory authority and overseen by an independent board.

To assist in effectively representing your interests in our advocacy to the Government, the Victorian Chamber would like to hear about how this proposal might impact your business. To discuss your views, please contact Hugh Horsfall, Manager Economics and Industry Policy, on 03 8662 5106.

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