The NSW government recently passed the Community Services Sector (Portable Long Service Leave Bill) (NSW) 2024, commencing operation on 1 July 2025. Employers in the NSW community services sector need to prepare for the implementation of this new scheme, which will mean community services sector workers:
- accrue long service leave based on their time working in the sector, not just with a single employer; and
- can access portable long service leave after seven years of service in the sector, even if they change employers, which is similar to schemes in Queensland, Victoria, and the ACT.
This reform is intended to assist the industry in attracting, retaining, and building its workforce to meet growing demand. It has been recognised that workers in this sector frequently change employers and sometimes work for more than one employer simultaneously, meaning they miss out on long service leave.
Which employers will be covered by the scheme?
The scheme will be compulsory for employers where their ‘predominant purpose’ is to provide one or more community services. Guidelines will be provided to assist with interpreting the term ‘predominant purpose’.
The Bill sets out a lengthy list of various types of community services, including the following services:
- disability support
- foster care
- homelessness support
- neighbourhood and local community
- out-of-home care
- youth support
The scheme will apply to not-for-profit and for-profit organisations, but government employers are excluded.
It will not cover stand-alone aged care services, early childhood education or health care services. However, where an organisation’s ‘predominant purpose’ is to provide community services and operate another service, such as a child care centre, all employees are covered.
Which employees will be covered by the scheme?
It will apply to all employees of an employer in the sector, including all support staff, management staff, including head office staff who do not provide direct care, maintenance workers and others who do any other type of work for the organisation. It includes full-time, part-time and casual employees.
How much portable long service leave will workers accrue?
Workers will be eligible for 6.1 weeks of paid long service leave after 2,555 days of recognised service in the sector (equivalent to seven years’ service). This is the same rate as currently applies under the Long Service Leave Act (NSW) 1955, but with a shorter vesting period. Workers who have reached seven years of service will accrue long service leave at the rate of 0.8667 weeks for each subsequent 365 days of service.
All workers who register for the scheme before 31 December 2025 will be ‘foundation workers’ meaning they receive a gift of a one-off 365-day service credit. This is intended to incentivise registration. Accordingly, they are able to access long service leave after six years of subsequent industry service. Therefore, the first occasion that any workers will be able to take portable long service leave will be 31 December 2031.
Provisions are included to ensure the scheme operates effectively alongside the Long Service Leave Act (NSW) 1955, ensuring no one is disadvantaged and no one ‘double-dips’.
When can workers take their portable long service leave?
Workers will be able to take their long service leave after completing the equivalent of seven years of service.
It must be taken at a suitable time approved by their employer, in periods that are two weeks in duration or longer. It can be taken in conjunction with other paid or unpaid approved leave.
Can workers receive a pro-rata payment instead of taking portable long service leave?
No, it must be taken as actual leave unless a worker has completed the equivalent of five years of service and has permanently ceased doing community service work. If so, they can apply to the Long Service Leave Corporation for a pro-rata payment instead of taking long service leave.
How will portable long service leave payments be determined where the work pattern and income are irregular?
The payment rate for long service leave paid to workers will be based on their highest weekly wage (including shift penalties but not overtime) in the most recent two, four, 20 or 28 quarters of employment, before taking long service leave.
The regulations may provide for minimum and maximum pay rates in this regard.
Can workers take breaks from working in the community services sector and still receive portable long service leave?
Yes, breaks from the industry of up to four years are permissible.
Who will pay for portable long service leave?
Employers will incur the cost of paying ongoing levies to the Long Service Leave Corporation. The proposed starting levy rate is 1.7% of ordinary wages, with employers paying levies quarterly. The levy percentage is hoped to decrease in the medium term once the fund grows in size due to revenue from investments. The levy decreased with a similar NSW scheme for the contract cleaning industry. Contractors who opt in also pay a levy.
The Long Service Leave Corporation pays long service leave to workers when they take long service leave, not the actual employer at the time.
What should employers do to prepare for the commencement of the new Bill?
Employers will need to prepare for:
- new administrative requirements including a one-off obligation to register with the Long Service Leave Corporation as an employer within a month of the scheme’s commencement, and the obligation to register workers who do not register themselves;
- new ongoing reporting obligations to retain and provide accurate quarterly worker records to the Long Service Leave Corporation including payment details and the number of days of work done by each registered worker;
- updating their internal provisions for long service leave liabilities for employees in accordance with accounting requirements;
- updating employment agreements and policies to accord with the new portable long service leave requirements; and
- informing new and existing workers about portable long service leave.
Please get in touch with us if you need any assistance with ensuring your organisation is meeting its long service leave obligations and is prepared for the new scheme. We are happy to help.
