The following was received from the Victorian Council of Social Service:
The Portable Long Service Leave Reference group was today invited to a briefing at Parliament House, by Telmo Languiller, Parliamentary Secretary for Community Services. DHS provided the briefing.
All DHS documents are being posted up on http://www.dhs.vic.gov.au/pdpd/csif/ About half way down this page is the section on Portable Long Service Leave.
This includes a fairly detailed ‘frequently asked questions’ document. http://www.dhs.vic.gov.au/pdpd/csif/downloads/plsl-faq.pdf
It also includes a government response to the recent PWC consultancy which the sector campaigned for, and whose findings we support. http://www.dhs.vic.gov.au/pdpd/csif/downloads/pricewaterhousecoopers-response.pdf
The PLSL legislation was tabled for first reading in Parliament today. It is expected that a second reading will occur in the last sitting week of this Parliament (early October). However the Bill cannot be passed in the lower or upper house until a federal legislative amendment to the Fair Work Act is passed. Assuming this occurs in early 2011, the earliest we can expect the implementation of portability is July 2012.
A copy of the legislation will be available publicly after the second reading speech in early October. Several of us have given input into earlier drafts of the legislation, (most recently VCOSS gave input on tidying up definitions and scope wording as we felt it was unclear).
The legislation has picked up:
- The authorisation of a new Community Services Long Service Leave Statutory Authority (with an independent Chair appointed by the Government, and 2 rep’s each from employer and employees with finance and funds management expertise). Comment: This is good, VCOSS has been seeking an independent Authority, not a government department to run the scheme.
- The Authority to be given powers to levy registered employers a percentage of ordinary salary for all eligible employees (while this is not in the draft legislation it is proposed by Government that this will be approx 1.6% of ordinary wages, which will include a 0.2% admin component). Comment: It seems sensible to leave this final determination to the Authority, given the total number of workers and total costs are not yet fully known, it would be unwise for the Government to set the levy at this stage. If the pay equity determination significantly lifts wages, the admin overheads will be lower in percentage terms by the time the scheme commences.
- The scope of the scheme – participation will be compulsory for non-government, non-profit community service organisations, that run services to assist people who are disadvantaged, vulnerable or in crisis, and or children’s services. The more specific activities have not been fully spelt out but the attached links to the DHS material give more info. A number of employee categories are specifically excised i.e. employees to be covered by new multi-employer arrangements in the kinder sector; aged care workers; health workers in community health (i.e. those covered by other portability arrangements). Comment: VCOSS has made comment on previous drafts re scope, and hopes that the final version is clearer than earlier versions; we won’t know this until early October.
- There is space for opt-in registration for out-of-scope employees, organisations or administration of above-Act entitlements for those employers who seek to do this, on a cost recovery basis. Funds administered for these purposes will be employer funds (e.g. the employer will be paid interest on funds administered in this way etc). Comment: VCOSS has strongly advocated for these components and it was good to see them picked up by the recent PWC report. In effect, we hope this offers the means by which small (or large) organisations can fully outsource their LSL administration, without losing the funds from their balance sheet.
- Employees will accrue 8.7 weeks of leave after 10 years of service for employers registered in the scheme (whether they move jobs or not). Additional LSL accruals relating to specific awards or certified agreements will be above this, but not be portable. Comment: VCOSS strongly supports the principle of portability of LSL, and to the extent that Victorian legislation can pick up a plethora of industrial entitlements, several of which relate to federal awards or bargaining arrangements, this is what we expected from the scheme.
What hasn’t been picked up in legislation:
- The actual levy at commencement (see above comment – Government proposes 1.6% but the final determination will be by the Authority)
- The support the Government will allocate to setting up the scheme, including a subsidy of the on-going levy payable by employers to cover administration (as recommended by PWC) . The Government told us today that they will commit $5 million to setting up the Authority and the scheme, and allocate an additional $4m towards subsidising the levy over the first 3 years. Comment: VCOSS welcomes this first stage of funding and notes that PWC recommended Government should subsidise the 0.2% admin levy projected by the Actuary. A VCOSS ‘back of envelope’ estimate is that about $50m over the first three years would be required. Between now and when the scheme is implemented, VCOSS will need to persuade Government to fully address the cost impacts of this scheme. We need to ensure this welcome benefit to community sector workers is not treated as a cost-shift to a sector that is already struggling financially.
In particular, as with pay equity, we will need to pursue fair funding from Victorian government departments without unit pricing arrangements and push for government implementation and transition support for organisations heavily reliant on their own income sources and federal government funding.
Still to check:
- There will be an actuarial review of the scheme every 3 years. VCOSS will follow up, to ensure this will enable Government and sector to discuss the financial impacts at that time, and re-negotiate funding arrangements accordingly.
- Enforcement regime and penalities for non-compliance. We need to see the full version of legislation before being able to comment on this. VCOSS commented on some proposed elements of compliance and registration in an earlier draft and hopes that community and voluntary sector organisations will be resourced with education and assistance, and not be subjected to unrealistic requirements or overly punitive enforcement.
We will call a meeting of the VCOSS PLSL working group as soon as the legislation is made public, and agenda a longer briefing on PLSL at our regular Peaks and Statewide Networks Forum on Tuesday 5 October.
