New penalties apply if employers fail to pay accrued long service leave 3 min read
On 29 April 2021, the Victorian Government passed the Industrial Relations Legislation Amendment Act 2021 (Vic) (IRLAA) to amend various pieces of industrial relations legislation in Victoria, including those dealing with long service leave and anti-discrimination.
- Employers will be exposed to criminal prosecution and daily penalties if they fail to pay accrued long service leave entitlements to Victorian employees on the day their employment ends.
- Contract workers (eg labour hire workers) will be entitled to the same protections as employees under anti-discrimination laws and employers will be required to make reasonable adjustments for contract workers with a disability.
The IRLAA introduces amendments to a number of pieces of industrial relations legislation in Victoria. We have set out below some key changes introduced by the IRLAA, which will apply from 1 July 2021.
Amendments to the Long Service Leave Act
The IRLAA amends the existing provisions of the Long Service Leave Act 2018 (Vic) (LSL Act) dealing with long service leave entitlements on termination. Under the new provision, if an employer fails to pay an employee's accrued but unused long service leave entitlements in full on the day employment ends, the employer commits a continuing offence. This means that the penalties applicable to the offence apply for each day during which the accrued long service entitlement remains unpaid.
The daily penalty for companies that fail to pay long service leave entitlements on termination is 60 penalty units ($10,904.401). As these penalties will accrue on a daily basis, employers may be exposed to significant penalties if there is considerable delay between termination and the payment of accrued long service leave entitlements to employees.
The IRLAA has also amended the LSL Act to clarify that employers and employees cannot contract out of the LSL Act under the terms of a deed or other agreement (whether entered into before, during or after employment).
Amendments to Equal Opportunity Act
The Equal Opportunity Act 2010 (Vic) (EO Act) has been amended to clarify that certain protections available under that Act extend to contract workers.
As a result of the changes, the EO Act will expressly provide that contract workers who engage in activities such as requesting information regarding their entitlements or raising concerns about those entitlements, are engaging in an employment activity. Consequently, the provisions of the EO Act that prohibit discrimination on the basis of employment activity will also extend to contract workers.
Further, a new provision has been inserted into the EO Act that will require employers to make reasonable adjustments for contract workers with a disability, where required to enable the worker to perform the genuine and reasonable requirements of their role.
Under the EO Act, contract workers are those performing work for a principal under an agreement between the worker's employer and the principal, such as labour hire workers.
Based on the value of a penalty unit from 1 July 2021.