Portable Long Service Leave extension in Queensland – community services

This article was originally published 15 July 2020 and was updated 09 November 2020 and again 23 June 2023.

What is portable long service leave?

Traditional long service leave (LSL) arises when an individual employee works for a single employer for a period of fifteen years thereby becoming entitled to paid long service leave of thirteen weeks. A pro rata entitlement applies after ten years’ service.

The concept of PLSL is that an industry or sector replaces the single employer, meaning an individual who works within a designated industry or sector for fifteen years is entitled to LSL. Pro rata service rules apply. Employers commit a contribution to a statutory body, in this instance QLeave, based on the period of time that the individual is employed by their entity.

If an employee has worked with the one employer for ten or more years, then the employee will most likely claim their LSL entitlements from their employer. The employer will therefore lodge a claim with QLeave for reimbursement to the extent that levies have been contributed to QLeave.

If an employee works within the community services sector in Queensland for more than ten years, but for multiple employers in that time, the employee will claim their LSL entitlement directly from QLeave rather than their current employer. This generally will not occur within the first seven years of the scheme as the scheme only takes into consideration an employee’s service in the sector from the start date of the scheme.   

The community services scheme’s key aspects

Key aspects as presently contained in the scheme include:

• Applies to most employers and employees in the community services sector, private and not-for-profit (NFP), but excludes government employers and employees

• PLSL is administered by QLeave, the entity that manages the PLSL schemes for the building and construction industry and the contract cleaning industry 

• Start date to pay the contribution levy was from 1 January 2021

• Employees can only claim LSL from the scheme for service within the sector after the start date

• The levy is set at 1.35% which is a discount to the standard liability percentage if an employee achieves their long service term (thirteen weeks after fifteen years equates to 1.6667%)

• Employers do not receive a refund for employees who leave the sector without becoming entitled to LSL

• LSL is payable to the employee sooner under this scheme – 6.1 weeks after seven years (still based on thirteen weeks entitlement for fifteen year service)

• LSL entitlement is paid based on the wages/salary at the date of taking the LSL, with a reconciliation cap tied to the wages paid as contributions.

It should be noted that the scheme does not remove the responsibility/liability of the employer to pay LSL. Employers who pay LSL to employees should be entitled to claim back some funds from the scheme.   

Definition of the sector

Section 7 of the legislation sets out the community services industry as the industry in which entities provide community services in Queensland.

Further to this, section 7 defines community services work to include providing community services or supporting the provision of community services.

Community Services is defined in schedule 1 of the legislation to include:

• Aboriginal and Torres Strait Islander community services
• Accommodation support services
• Advocacy services
• Alcohol and other drug support services
• Child safety and support
• Community development services
• Community education services
• Community legal services
• Counselling services
• Disability emergency response services
• Disability support services
• Employment services
• Family and domestic violence services
• Financial counselling services
• Foster care and out-of-home care services
• Home and community care services
• Homelessness support services
• Lesbian, gay, bisexual, transgender, intersex or queer services
• Mental health services
• Migrant and multicultural support services
• Offenders transitioning services
• Respite services
• Seniors community support services
• Social housing services
• Violence prevention services
• Women’s services
• Youth justice services
• Youth support services.

The above list is based on a schedule developed in a 2016 Report by Deloitte Access Economics ‘Forecasting the future: Community services in Queensland 2025’ commissioned by the then-Department of Communities, Child Safety and Disability Services and the Community Services Industry Alliance on the sector.

However, there are no further definitions of what is included under the various categories, and it remains the responsibility of employers to consider if their activities fall within the list.

Services stated as being excluded from the scheme include general health services, childcare and aged care.

Definition of employer

There are four categories of employer under the legislation:

1. An entity established for/with the purposes (including the provision) of community services that engages an individual
2. A self-employed individual who provides community services
3. A provider of labour hire services* that supplies an entity in (a) or (b) with an individual to perform community services work for the entity
4. An entity prescribed by regulation.

Excluded employers include Commonwealth, State and Local Government organisations and any entity prescribed by regulation.

The levy is payable on the ordinary wages paid to employees. This consists of gross wages, any penalty rates, allowances (except for expenses incurred for the use of equipment or motor vehicles), and deductions from gross wages.

For employers and employees with salary sacrifice arrangements, including fringe benefits tax (FBT) exempt salary packaging, in place:

• The employer levy payment is based on the gross salary before any salary sacrifice
• The payment of PLSL to the employee will be based on the gross salary
• The employer will need to pay the employee if salary sacrifice is to be applied during the period when the LSL is being taken. The employer will claim the PLSL entitlements using the gross salary from QLeave.

An employer other than a self-employed individual who provides community services, must apply for registration within twenty-eight days after becoming an employer, or face a maximum penalty of forty penalty units (approximately $5,338). Employers are then required to lodge a quarterly return and payment of the levy to QLeave within fourteen days of the end of each quarter. Employers must also maintain a record for all workers for six years, which includes:

• Personal details of the workers
• Worker registration number
• Date of commencement and cessation of employment
• Wages paid and leave taken.

Definition of employees

Referred to in the legislation as a worker, an employee is an individual who is:

1. Engaged by an employer to perform community services work
2. Self-employed and performing community services work.

Importantly, this has broad application and is designed to capture all full-time, part-time, and casual staff as well as individuals engaged under a contract for service. Employees are required to be registered either by applying themselves, or by information supplied by an employer.

If a worker leaves the Queensland community services sector, there is a four-year period during which their service credits remain active. This period is extended if a worker has had service in the community services sector registered under a corresponding law (currently only applicable to service in the Australian Capital Territory (ACT) and Victoria). Otherwise, after that four-year period has passed, their service credits will expire.

LSL entitlements from the scheme are based on the wages at the time of commencing the LSL subject to a reconciliation based on the actual wages paid during the period of accumulation of the service.

Impacts for organisations

BDO considers the main outcomes for organisations as follows:

• Organisations need to determine whether they are operating in the community services sector and, therefore, whether registration and payment of the levy as an employer is required
• Entities not directly involved in the community services sector may also be impacted, particularly labour-hire entities
• Organisations must ensure all employees who are subject to the scheme are included – both direct front line and those supporting the service delivery
• Organisations must pay the levy on the correct amount of wages
• Interstate organisations with employees in the Queensland sector will be required to register and pay the levy on the Queensland employees
• Organisations must pay the levy on service by all employees from day one of their employment
• There is a risk that employers may inadvertently be required to pay long service leave twice – once in the form of the levy and then at a later date to satisfy their industrial law liability as an employer
  • This could arise where an employee remains with the employer but is transferred interstate to a jurisdiction without a corresponding scheme or to a related business unit that is outside the community services sector
• Record keeping is important for employers, especially in circumstances where the employee remains with the employer but ceases to qualify for PLSL from QLeave. An employer can claim the PLSL credits from QLeave as a reimbursement after the employee is paid for their long service. No recovery from QLeave is available if the employer claims the PLSL in advance of payment to the employee.

It's vital that employers who may be impacted by the scheme understand its mechanics and their reporting obligations, to minimise the risk of penalties applying.

Keeping you informed

BDO is continuing to monitor the rules to determine how the legislation will impact entities and individuals employing persons in Queensland.

Should you have any queries or concerns related to the extension of PLSL to the community services sector, please contact us. 

Visit QLeave Community Services for more information.