Long Service Leave in the Building and Construction Industry

Building and Construction Industry

HR Advisor Stephanie Topp recently assisted a client with a long service leave issue in the construction industry. Given that long service leave can be a complex area, we decided to explore it in more depth.

The Construction Industry Portable Paid Long Service Leave Act 1985 (the Act) provides a scheme whereby workers who are employed in the construction industry may enjoy the benefits of long service leave based on service in the construction industry (i.e., service with more than one employer) rather than for continuous employment with one employer.

My Leave is WA’s portable long service leave scheme for the construction industry. It is mandatory for employers who have employees working in the construction industry to register and contribute for those employees.

Who is covered? My Leave is basically a blue-collar scheme, with employees to be eligible, he/she must be working in a prescribed classification (being the various classifications set out in the awards relating to the construction industry that are set out in Schedule 1 of the Regulations), with his or her employer being liable for contributions under the Act. The scheme covers all employees, full-time, part-time, or casual.

For a permanent employee to be eligible, he/she must be working on-site and be substantially engaged within the construction industry (more than 50% of his time on the construction site). For a casual employee, contributions are required for each day that he/she engaged in the construction industry.

An interpretation of a site means a place aside from the normal place of business of an employer, in which construction or maintenance (to fixed plant) is carried out. It includes residential and mining sites.

There is no prerequisite that the site be a new building/construction site.

An exemption exists under 3(f) of the Act for employers not substantially engaged within the construction industry, who engage employees only in routine or minor maintenance.  

An employer who engages apprentices within the construction industry must also register although there are no monetary contributions required for the service days.

What do they pay? Under the scheme, employers pay set contributions to the Board based on the ordinary rate of pay of eligible employees. The Board, in turn, pays the employees covered by the scheme for long service leave after the requisite period of service in the construction industry.

Employers pay money into the scheme based on the amount employees work on other sites. The amount paid to the scheme varies each year, in 2021 the percentage paid was 0.5% on all ordinary hour’s worked, typically 38 hours a week. In 2022 the percentage to be paid is 0.1% on all ordinary hours worked.

For permanent employees, it is typically a 38-hour week unless there is an industrial instrument/EBA which specifies that the ordinary hours are different to the industry standard.

For casual employees, contributions required for each day worked which could include Saturday and Sundays.

Do they have to pay into the scheme for all hours? If an employee works 75% at a construction site and 25% at the employer’s workshop or an employer-owned site, the employee is only entitled to have contributions made to My Leave for the portion of work at the construction site.

Employers are only required to make contributions for ordinary hours, however, much like with Superannuation, if the employer cannot differentiate ordinary hours from overtime, they may open themselves up to the risk of paying the percentage on all hours worked.

What if an employer hasn’t paid into the scheme? If the employer has not paid in the scheme but has had employees working in the construction industry, they need to register with My Leave and will be asked from what date they first employed someone who is eligible.

The employer will then need to collect the relevant information to organise a back pay. Where the back pay is large there is the ability to set up financial payment plans for the employer.

Are there penalties? There is the possibility of penalties, however, these are unlikely where an employer signs up to My Leave and rectifies the issue as soon as possible.   

What happens when an employee wants to take leave? After accruing 10 years of service in the My Leave Scheme employees get 8 2/3rd weeks paid long service leave with an additional 4 1/3rd weeks leave for each additional 5 years of service after that.

Pro-rata (proportionate) leave of 6 weeks is available after only 7 years. Pro-rata leave can be taken with the approval of the employer. There are also other pro-rata (proportionate) benefits.

When an employee applies for leave, they make an application to My Leave and their employer is required to endorse the application.

If the situation exists that an employee accrues long service leave under the Long Service Leave Act 1958 with the employer (before becoming eligible with My Leave), then he/she may be paid long service leave by the employer who will then seek reimbursement from My Leave for contributions already made to My Leave.

If you have an issue with your employee’s entitlement or payment of long service leave please don’t hesitate to contact us and one of our expert HR Advisors can assist you. Call (08) 9316 9896 or visit our website for more information https://www.processworx.com.au/

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Written by Danielle McNamee

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Marisa Ross

HR Advisor

Marisa is an experienced and motivated HR professional with a strong HR generalist and business operations background with a focus on employee relations, performance management, leadership training & development, workers compensation & injury management, and employee retention. Marisa holds a Bachelor of Human Resource Management and a Bachelor of Behavioural Science with a minor in Counselling. Having worked in a variety of industries from SMEs to large blue-chip organisations, Marisa is passionate about enriching employee experience, employee retention, and building leadership capability in people management.

Aimee Grigson

Aimee Grigson

WHS Advisor

Aimee has a strong understanding of Workplace Health and Safety Legislation and standards and has extensive HSEQ experience in a number of industries. Aimee has a great ability to engage across all levels of organisation, including field teams, leadership and external stakeholders. Aimee ensures Health and Safety Management Systems are compliant to legislation, effectively implemented and understood by all. Aimee has a Certificate IV in Work Health and Safety and qualifications in auditing and incident investigations. Aimee is passionate about coaching and developing small businesses towards a positive safety culture.