Long service leave could be replaced by extra super or annual leave

by Victoria Bruce04 Apr 2016
Employers should offer staff extra superannuation or an annual take home payment in lieu of the current long service leave arrangements, the Australian Human Resources Institute says.

Australian workers could make better use of the money their employers reserve for long service leave if this was re-directed into increased take home pay, creational leave credit and superannuation – or a combination of all three.

This was AHRI’s stance in a recent submission to the Victorian government's review of long service leave arrangements.

AHRI national president Peter Wilson said this type of scheme could replace traditional long service leave by directing it to "where it's most needed by workers today – their take home pay to meet current cost of living, or into their superannuation funds to better provide for their retirement".

In a recent survey of more than 1700 members, AHRI found 62 per cent of survey respondents reported the average length of employment in their organisation was less than eight years.

Only 21 per cent reported an average tenure of 10 years or more, the AFR reported.

While those in the public sector were more likely to stay longer in their current job, with 42 percent having an average tenure of 10 years, compared to only 15 percent of private sector workers and less among not-for-profit workers.

Wilson says current Victorian long service leave of 8.6 weeks on full pay, which employees can access after working with the same employer for 10 years.

He suggests a system which vests the equivalent annual value of the current long service leave benefit in each and every year of employment during the first ten years, and subsequently.

"An actuary could calculate more exactly what this translates to as a percentage of a person's basic pay in any year,” Wilson says.

“For sake of argument let us assume it's a 1.7 per cent premium to the basic annual rate of pay in each and every year of employment,” he says.

“Once this sum is known, Victorian workers could, for example, elect annually whether to take this value in their take home pay, or to direct it into their superannuation, or some combination of those two elements."

Victorian Industrial Relations Minister Natalie Hutchins announced the review into long service leave in February 2016.


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