For sure the idea has great merit. Not knocking your suggestion at all just placing some observations about ways and means.
3 Likes
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.
2 Likes
I knew the employer factored it in, I was being facetious. 
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.
2 Likes
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?
2 Likes
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.
2 Likes
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?
1 Like
LSL is a uniquely Australian/New Zealand entitlement. Its history was to enable settlers to visit families in the UK when the travel time each way was 30-40 days.
Is such an entitlement relevant in 2020 or is it an anachronistic holdover that should be rolled into wages or consigned to history?
My expectation would be that nothing would increase pay if LSL was eliminated because today’s gig workers and few others outside the public service qualify for it anyway. The criteria is continuous service, and rolling it into wages where only the lower end receives benefit (although that is socially conscious) likely becomes a ‘Personal Benefit LSL’ to the ATO, gets means tested, and like other things rightfully helps battlers but arguably penalises those who did well enough in life to take care of themselves, but did not become wealthy (I’ll leave the definition of that as it is not germane here) and hence get zero benefit.
1 Like
If one is a sole trader or a small family business, an additional costs impacts on the income of the business/income of those who are sole traders/in the family business. They aren’t mutually exclusive. For a paid employee of a business someone else owns, then yes, the cost can be transferred to the employee as they receive the benefit.
How ever it is funded, my idea is that having a long service scheme could be considered to be made compulsory like superannuation is. Imagine for a moment if superannuation had not been made compulsory in Australia. The country would not be in the position it is now as the tax payer could not afford to support everyone as the population ages. Ultimately I see more positives than negatives and a LSL scheme would benefit both the person and Australia.
Casual employees are supposed to be paid more, that includes their holiday and sick pay, but apparently not long service leave. My belief is that no one gets long service leave unless they have been in the same job and same employer for at least 10 years.
Thins may have changed but it used to be that one problem is that the employees do not provide that extra wage for themselves for their leave and if they are sick and seem to for get what the extra pay is for. It appears that this is not working, so may the employer needs to pay them the going rate (same as permanent staff) and then pay them if they have leave or sick. If they don’t take sick pay they could be worse off.
(state dependent) in Victoria workers get entitlement at 7 years, not 10, since a 2018 act update. It is the same employer, not the same job, and if a company is sold the employer is deemed to be ‘the same employer’…
What has changed is that under the 1992 Act, employees were not able to take leave until they had worked a minimum of 10 years. If employment ended after 7 years, they would be entitled to be paid in lieu of leave. Under the LSL Act 2018, the entitlement to take leave arises at 7 years, and employees are entitled to apply for leave from that day.
2 Likes
As outlined above, some industries and sectors have portable long service leave which can be transferred between employers.
@PhilT is also correct that some states/organisation employment agreements allow accrued LSL to accessed after 7 years.
1 Like
Casual employees already received a LOAD RATE which is in lieu of Holiday & Sick pay. IF they also get paid holiday/sick pay then they would be receiving double the amount. Definitely NOT fair on employers. Got to be one or the other.
2 Likes
That is correct, as I outlined above it is around 1/3 more than a part time in the same role (info from when I managed both permanent and casual employees), where a part time employee receives such benefits in addition to their hourly rate.
@TheBBG also gave his own experiences and indicated the loading was between 30-50%.
Slightly OT, but also worth the mention is that in the case of redundancy, employees in some states/territories may be entitled to payout of LSL as part of their ETP earlier than they would have been entitled to take it.
1 Like
LSL for casuals will lead to quite a few 6 year 11 month periods of employment; its not going to work
Indeed otherwise its basically just turning ‘casual’ into ‘part-time’
In SA the ‘pro-rata’ period is 7 years and 10 to actually take it as leave.
