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Long service leave for casual employees?

With the recent ruling by the Federal Court stating that casuals be entitled to annual leave and sick days, I would like to put forward an idea that I have had for many years regarding having a long service leave scheme.

As a casual employee or someone who changes jobs every few years, there is currently no chance they would ever get long service leave. If however there was a scheme that collected the long service leave from the employer similar to superannuation then every working person would eventually have accumulated a buffer of paid leave regardless of having changed jobs every few years.

Having a long service saving scheme would be to everyone’s benefit, not just the person. The money’s from the long service leave fund could be used to build infrastructure projects to benefit Australia. The obvious benifit is to provide a person with a chance for a paid holiday but also as a buffer of paid leave if they were to get sick but did not have any sick leave accumulated. Also, the paid leave could possibly be made available in times of hardship.

One negative is that it could cost around $20 a week (0.2%) if the employee was earning $50,000 a year. The money does not disappear though like insurance payments and is sitting in a fund for them in the future. I think the benefits of having an accumulating long service scheme is worth some thought.

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Some industries and organisations allow the transfer of long service leave from employer to employer. This is particularly the case for the construction industry and in some states, contract cleaners and community service workers. There are other examples such as moving within government departments or GOCs. One should check whether accrued long service leave is portable when changing employers, particularly if they are in the same industry or sector (e.g. public service).

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The ruling was not exactly that, it was Casual employees working full-time hours will be entitled to paid leave. They are differentiated from casuals who are employed irregular hours on demand.

While that is good news it appears from the linked article government may intervene in an appeal, or legislate against it using the reason the economy is too fragile.

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Casuals however do not accrue LSL as that is considered a Permanent Part Time or Full Time employee benefit. There is no provision in accounting practices for LSL accruals for Casual employees. It wouldn’t matter if they moved jobs or not. Some contract cleaner and even Contract Employees in Govt jobs can accrue LSL entitlements but this also depends on the type of Contract they are employed under eg SES (Senior Executive Service) staff are all generally Contracted but they do accrue LSL under their contracts. Part Year Contracted Employees eg some teachers or short term staff do accrue Holiday pay but do not accrue LSL entitlements as their contract is not generally an on-going contract and hence no provision is made for them.

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Which is the point of my post that maybe we should be looking to provide this benefit to some of our most vulnerable workers?

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Hi, sorry if I am wrong about the sick leave, but I was quoting from a news article posted on this Choice Community website.

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Hi, I was referring to people working in private industry such as the hospitality industry and not government jobs.

While you are mostly correct regarding the public service there is the rare exception. I worked with someone who came to work for the Victorian Public Service and he was informed that the Geelong council had no reciprocal agreement with Vic Govt and his years of service with the Geelong council did not count.

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I understood your argument in regards to providing LSL to casuals. If they work FT or near enough to then I agree. There are some who work truly casual hours with a few different employers, how do the employers make provision for that particularly if the employee is quite transient in their work life. Worthy of looking at but in some cases hard to action I would think. Even with FT employees they don’t generally become eligible to access that leave or a pro-rata payment of it until several years of employment have been undertaken, this adds further complexity to the provision for some casual and itinerant staff. It would perhaps need some Nationally Based scheme to hold all the LSL funds for each worker such that when they transfer, move, cease and return to work that the scheme maintains those funds until the worker reaches sufficient work life history to access the funds. This of course would be something like National Pension schemes such as found in European countries or our National Super scheme , where an employee regardless of their work movements accrues a lifetime benefit but each employer has to submit those monies to a scheme on the employee’s behalf.

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I believe that was exactly the point - we need something like that, especially with the increased casualisation of the workforce.

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Hi graholl, I am putting forward an idea for discussion and I do not have all the details and answers for you.

Maybe as an idea for collection the employer adds a fraction (0.2) of a percent to the already collected superannuation and this is then placed in a fund that is separate and available eventually for a holiday and not locked away until retirement.

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For sure the idea has great merit. Not knocking your suggestion at all just placing some observations about ways and means.

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In reality, employees have paid for super through reduced pay rises…and placing a cost for say a mandatory leave banking program will also be borne by the employee…especially since it benefits the employee and not the employer. Would employees be happy to pay for such a scheme which would be more than 0.2% due to program management, administration and compliance fees…they would possibly only support it if the employer, and not themselves, paid for the additional benefit.

As someone who has already enjoyed the benefits of long service leave I do not recall ever having contributed to my LLS.
It would, however, may not be unreasonable for the employee to contribute such a small amount for something that ultimately comes back to benefits them at a later date.

It would have occurred indirectly as part of the employment package and/or enterprise agreement. Business factors its cost into what is offered to employees.

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I knew the employer factored it in, I was being facetious. :wink:

Originally long service leave may have been a selective reward for staying loyal to the one employer. In my early years it was one of the considered perks of a public service job, most of which were not well paid compared to private enterprise, reputedly?

The idea LSL is a universal entitlement and transferable would undermine that incentive, if indeed it is still relevant. Isn’t the suggestion just as readily accommodated by increasing annual leave entitlements by a similar proportion? It might be simpler and easier to finance.

There may be traps with a centralised depository for accrued LSL. Some employees bank their LSL for a long time, 20+ years. I did. There was no compulsory requirement to take LSL. It is also paid at your current rate. Yippee!

Over time looking at the minimum wage, the cost to a centralised fund will be increased due to wage cost inflation, and also role changes (increases) in experience, pay scale, etc. The minimum wage increased from around $2.50/hr in 1975 to just over $20/hr today. It’s a difficult cost to forecast. Likely more than the 2.6% of annual income, 1.3 weeks for every year of employment suggests.

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As I have stated previously I am putting for an idea for helping those people who up till now have never accumulated long service leave.
To try and put forward a solution to wages increasing over time I imagined that any long service leave fund could be run similarly to how managed funds are run now. The LSL money collected would buy “units” in the fund and those units should hopefully increase over time and hopefully match wage increases over time. So what i am saying in a nut shell is if $1,000 was put in one year at end of the next year that $1,000 it might be worth $1050 when hopefully the funds units increase in value which in turn should keep pace wage rises. People would then be entitled to the amount of units purchased at the current market value.

Hopefully @jeff61 you appreciate there are different thoughts concerning what you are suggesting. Exploring or offering alternatives is one way to better understand what might need to change to deliver your suggestion.

I wonder if given the choice how many would give up the example $1,000 per annum of income for a future promise of some extra paid leave. That $1,000pa or what ever the exact amount is, could be put aside for 13 weeks of LSL in 10 years time. It could alternately be used to help with living expenses, paying down the mortgage or added to super.

It’s a consideration too that any LSL when taken is taxed at the same rate as normal income. So might the earnings in any fund set up to accrue money set aside, for that purpose be taxed. There are several options available to the government tax office.

It’s also an option to simply grandfather LSL out of all employment conditions and increase across the board the minimum rates of pay.

There is appeal in the idea of universal LSL. There is also much to consider?

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An employee may be better off doing this themselves into an investment fund or other long term investment strategy as they would get a better return. A managed LSL system would have significant fees like that which exist for superannuation. Small amounts like that which would be contributed for any LSL scheme, the fees would be a significant cost… like fees which can exist in small super account balances.

Rather than been locked into trying to take LSL, accumulated funds after say a number of years, this could be used to pay for a holiday, used to take unpaid leave or retire early.

The other thing is LSL rules are different to other forms of leave, where the employer must agree to LSL taken and its form. An employer can say that an employee has to use their LSL up by taking 1/2 day off per fortnight (I have done this in the past for critical staff). Such while benefits the employee, may not be what the employee is after.

Treating LSL as the same as other leave would require significant changes to that which currently exists.

The other thing is there is a significant proportion of the employment base that don’t qualify of LSL…should they be granted this ‘entitiement’ to create fairness for any employer/employee… especially those who regularly change jobs? Businesses such as sole traders or small family businesses are two groups won’t provide for LSL. Imposing an additional cost for LSL on these businesses would impact on the profitability of these businesses.

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It does not need to be a cost on employment. It can be funded out of take home pay, reducing after tax income by the amount contributed to a National LSL scheme. Alternatives include offsetting future national wage case pay increases. Perhaps individuals are given the option to join in, IE it’s optional. Adding the cost (edit clarification - casual employee LSL personal pay sacrificed as a separate item) into supper contributions might also be one way to minimise any increased indirect cost of employer administration, and leaves the value within the control of each employee?

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