Employers to benefit from portable long service leave

by Victoria Bruce19 Apr 2016
As the government takes a deeper look at the potential for a national portable long service leave scheme, one academic says the human benefit of such a scheme should outweigh any cost to industry.

While Australia’s business community remains divided, particularly over who will be responsible to pay for that employee’s entitlements, Professor Ray Markey from Macquarie University says long service leave can boost productivity and help retain highly skilled older workers in the workforce.

Markey, the executive director of the Centre for Workforce Futures at Macquarie University, says all employees should be able to access a period of long service leave regardless of whether they have remained with the same employer.

“Long service leave gives a much-need break to the workforce,” Markey told HC Online.

"Rested workers are more productive, are less likely to have accidents and less likely to take time off,” Markey says.

He says the cost to employers of an expanded long service leave scheme would be offset by higher productivity among workers.

“It's likely that much of the costs, which are small anyway, could be offset by higher productivity," he says.

As previously reported by HC Online, the concept of a national portable long service scheme would permit employees to carry their long service entitlements between employers, since LSL in its current form has become inaccessible to the majority of Australian workers.

Traditionally designed to reward employees who stayed with the one employer for a period of service, Markey says LSL in its current form is no longer practical in today’s modern workplace.

Allowing workers to access a period of leave after an accumulated time could also address issues of employee burnout by ensuring all workers get some much-needed time off work to rest and recuperate before returning to the workforce refreshed and re-motivated.

“This also encourages mobility and flexibility even further, as employees hang around because of long service leave entitlements,” Markey says.

He says Australians are spending more years in the workforce than ever before, thus highlighting the need for employees to take a break and rejuvenate before returning to work.

In a 2014 review of Australia’s portable long service leave, Markey and his co-authors recommended a national scheme and put forward a number of models for how such a scheme might work.

Basically, employers would pay a levee of between 1.5 per cent and 2.5 per cent of wage costs – considerably less than the approximate 9 per cent paid out for superannuation – into a centralised fund.

This money would accrue over time and be paid out once the worker achieved ten years’ of employment, regardless of how many employers they had worked with.

Markey says this money could also be invested to boost the revenue pool and such a pro-rata system would prevent the cost of long service entitlements becoming the responsibility of a single employer which may not have employed the worker for the whole ten-year period.

Industries such as construction, coal and security already have portable long service leave schemes in place, which Markey says helps retain high skilled workers within those industries.

“Employers who want to retain highly skilled workers in their industry should welcome the concept of portable leave scheme as a means to keep those skills alive,” Markey says.
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