Recent Victorian Supreme Court decisions have significantly broadened the scope of portable long service leave (PLSL) obligations in the state - impacting employers across a wide range of industries: you may now be required to contribute to a portable leave scheme, even if you’re not traditionally considered part of the construction sector.
What is portable long service leave?
Portable long service leave allows eligible workers to accrue long service leave entitlements even if they change employers, as long as they stay within the same industry. In Victoria, this scheme is administered by LeavePlus (formerly CoINVEST) and applies to several industries, including construction, cleaning, and security.
The scheme requires employers in the construction industry to contribute 3% of the ordinary pay of construction work employees into the LeavePlus fund. Employees then access the fund when they take LSL at any point in their construction work career.
What’s changed?
In a landmark judgment handed down on 3 April 2024, the Victorian Supreme Court ruled that both Energy Australia and Detector Inspector are obligated to contribute to the construction portable long service leave (LSL) scheme for certain employees. This is despite neither company being part of the traditional building and construction sector which was the previous common benchmark.
The key legal issue? The interpretation of what counts as a “construction activity” under the Construction Industry Long Service Leave Act 1997 (Vic).
Redefining “Construction Activity”
The Court took a broad view of the statutory definition of “construction work,” finding that activities such as:
- Installing,
- Maintaining, or
- Repairing systems that form part of a building’s structure
can all be considered construction-related for the purposes of the portable LSL scheme.
This interpretation significantly widens the net of businesses caught under the scheme. It’s no longer about whether a business sees itself as part of the “construction industry”—it’s about the nature of the work being performed.
Note that an appeal is pending regarding this court decision.
What work do Energy Australia and Detector Inspector perform?
Energy Australia operates in the energy sector, supplying power to Victorian homes and businesses. A portion of its workforce repairs or performs maintenance on the power generation infrastructure – this was considered to be construction work despite Energy Australia arguing otherwise. You can read the court decision here.
Detector Inspector provides essential safety services to residential buildings, including the installation and maintenance of smoke alarms, gas appliances, and electrical systems. These systems are considered part of a building’s structure. As a result, employees performing this work are now eligible for portable LSL entitlements under LeavePlus. You can read the court decision here.
What this means for employers
This decision has wide-reaching implications:
- Industry-neutral: Even if your business doesn’t identify as being in the construction industry, you may still have portable LSL obligations if any of your employees carry out work that involves installing, maintaining, or repairing systems integral to a building.
- Backdated liabilities: If found to have been non-compliant, businesses may be liable for back payments of employer contributions to the scheme.
- More industries impacted: Businesses in energy, HVAC, fire safety, plumbing, and similar sectors are now firmly in the spotlight.
What should employers do now?
- Review your workforce: Identify any roles that involve work on a building’s structure or systems, even if it's indirect.
- Seek advice: Professional advice can help determine whether your business now has obligations under LeavePlus.
- Act early: If you are newly captured by this ruling, taking proactive steps to register with LeavePlus and make contributions could help mitigate risk.
Need help navigating this change?
Given the serious financial impact that this decision could have on businesses, we strongly encourage any business that feels it may be impacted to speak with us in the first instance. Depending on the circumstances we may encourage you to seek legal or other professional advice to ensure the best outcome for your business.
