Incoming Portable Long Service Leave for NSW community services sector

From 1 July 2025 the Community Services Sector Portable Long Service Leave Act 2024 (NSW) (the Act) will commence, introducing a new mandatory Portable Long Service Leave (PLSL) scheme for the community services sector in New South Wales. The NSW Long Service Corporation (the Corporation) will administer the scheme which is similar to those already operating in the cleaning and construction industry.

The reform aims to support the community services sector in attracting, retaining and building its workforce to meet growing demand where employees frequently move between employers or work for multiple organisations at once. This will create significant obligations for businesses with additional administrative burdens, reporting requirements and costs associated with the levy system.

What is PLSL?

Unlike traditional long service leave, PLSL allows workers to accrue long service leave based on service across the sector, not just with one employer. 

Practically, this will mean a worker can move between employers within a sector and still accrue LSL entitlement. 

Employers will not be responsible for paying out the leave entitlement under the Act directly. Instead, they will pay a quarterly levy to the Corporation, which will fund workers entitlements under the scheme. 

The Long Service Leave entitlement 

The Act provides workers under this scheme will be entitled to 6.1 weeks of paid leave after 2,555 days of recognised service (i.e. equivalent to 7 years). 

Employees will be entitled to a pro rata amount of leave (i.e. 0.8667 weeks) after each extra year of service after they reach and pass 7 years’ service. 

The leave will accrue based on the number of days worked in the eligible employment that count as “recognised service.” 

Who is covered by the scheme?

The PLSL scheme applies to all eligible employers (including for profit and not for profit organisations) and workers (inclusive of full-time, part-time and casual employees as well as contractors who opt- in).  

Coverage is determined in two ways: 

1. Worker Assessment - any worker who performs “community services work” as defined under Schedule 1 of the Act is covered, regardless of the broader operations of the business. 
2. Employer Assessment - if the “predominant purpose” of the employer is to provide a “community service” (defined under Schedule 1), all workers, who work for the employer will be covered under the scheme. 

“Community services” under the scheme refers to a list of 31 broad service categories under Schedule 1. The list has been drafted broadly to be as inclusive as possible and capture a wide range of businesses operating within the sector. 

Businesses should refer to this list to determine whether your workers may be performing “community services” within the Scheme.

What does “Predominant Purpose” mean?  

The Act does not define “predominant purpose”. 

However, the Corporation has provided some guidance to assist employers self- assess their eligibility. Employers should consider their main business activities, how resources are allocated, and what is represented about the business publicly through websites or other organisational documents. 

Their guidance recommends reviewing your organisation in the below ways:

• What the organisation does day to day. That is the core activities of employees and where resources are prioritised.
• How the organisation is presented to the public. May be evident through your website or promotional materials.
• What your formal documents say. This may include your constitution, business plans, annual reports or funding arrangements.  

For clarity, where an employer’s “predominant purpose” is to provide a “community service” listed in Schedule 1, all workers employed by that business will fall within the scope of the scheme, including administration, maintenance, accounts payable etc. 

Due to the breadth of the Scheme businesses will need to perform a self-assessment to certify whether you meet the eligibility criteria. This will be of particular importance for organisations that are ‘multi- purpose’ who will need to assess their position carefully to avoid non-compliance. 

What do employers need to do?

Employers that employ one or more persons to do community services work before 1 July 2025 will be required to register within one month after the commencement of the scheme (i.e. 31 July).    New employers will be required to register within one month after becoming an employer. 

Employers will bear the responsibility of registering workers if the worker does not register within three months of starting to do community services work for an employer, within 14 days of the end of the three months.  Practically this means for employees engaged before 1 July 2025, employers will be obliged three months after the commencement of the scheme to register employees within 14 days.  

Once registered, employers must submit quarterly returns to the Corporation, including employee information (name, address, date of birth, phone number, email address), the type of community service work undertaken, the workers registration number given to the worker by the Corporation, and remuneration, within 14 days after the end of each quarter (i.e. 14 January, 14 April, 14 July and 14 October). 

Employers will also be required to pay a levy of 1.7% of the employees’ ordinary remuneration each quarter to fund the scheme.   This levy will be pooled into a central fund managed by the Corporation. ‘Ordinary remuneration’, meaning the amount paid or payable to the person for community services work (otherwise, for the time they would have earnt had they worked).  This does not include overtime, expenses incurred by the person and the use of materials, equipment or a motor vehicle provided by the employer/person.  

The Corporation has provided businesses with some time to prepare for this by postponing the first return from October 2025 to April 2026.  

Employers should commence tracking worker data and budget for levy payments in the new financial year. 

Operation of the new scheme alongside existing long service leave arrangements

The new scheme does not override the existing LSL entitlements under the Long Service Leave Act 1955 (NSW) (the NSW LSL Act).  Both entitlements can operate concurrently. Meaning, there may be situations where a worker is eligible under both the PLSL scheme and the NSW LSL Act. 

In this event, the worker must elect which entitlement they want to access and notify the Corporation in writing which leave entitlement they will be accessing. The Corporation will remove from its register the portable long service credits accrued for the same period of service. This prevents workers from double dipping. 

The Act does provide reimbursement provisions for employers for the service that is completed after the new scheme commences. 

Service breaks without loss of registration or credits

A key feature of the new scheme is its employee flexibility. Workers will have the ability to take a break of up to four years from the industry without losing their registration or accrued credits when a person had not been credited under the Act with at least one day’s service.   

By way of comparison, there is a two-month limit under the NSW LSL Act. 

Some have observed that providing the ability for employees to regularly switch employers as well as a right to take a break from the industry for up to four years appears to be a total departure from the common understanding of LSL; which is an entitlement to reward long service for a specific employer.

Regardless of this view, it appears that PLSL schemes will become increasingly prominent and may spread to other industries.  

A ‘Gift of Service’

A worker who is registered within six months of the scheme’s commencement (i.e. a foundation worker) will receive a gift of 365 days of recognised service.  

Meaning, these employees will be able to access their portable long service leave after six years subsequent service rather than seven years.

The intention of the ‘gift’ is to incentivise workers to proactively  register and recognise workers for their prior service that otherwise will not be recognised retrospectively. For clarity, the ‘gift of service’ can only be claimed under the PLSL scheme, not under other existing long service leave laws.

Record keeping obligations 

Employers must keep detailed written records for each employee for at least seven years after the day the employee ceases to be engaged by the employer. 

These records will include employee information (i.e. personal identifying information) the nature of the work performed, days worked in each return period, remuneration details in each return period, commencement and termination date, the nature of the community service work carried out by the employee. 

Practical consideration for employers

The new scheme imposes significant administrative and financial obligations for the employers in the community services sector. Because many businesses do not set aside funds for long service leave from the commencement of employment, a new requirement for regular financial contributions will be a significant shift in process.

Employers should prepare now by: 

• Assessing coverage - determining whether your organisation meets the “predominant purpose test” or employs workers performing community services work as defined under Schedule 1 of the Act. 
• Prepare for registration - if you do have one or more employees performing community services work you should ensure you register with the Corporation by 31 July 2025.
• Update systems - update HR and Payroll systems to keep track of the required employee records.
• Budget for levy payments - quarterly levy contributions will be 1.7% which will need to be factored into workforce planning and funding proposals. 

Businesses unsure if they fall under the scheme should contact us for additional advice and support at info@ablawyers.com.au or call 1300 565 846..