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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-09-24 Daily Xml
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LONG SERVICE LEAVE (UNPAID LEAVE) AMENDMENT BILL

Introduction and First Reading

The Hon. P. CAICA (Colton—Minister for Industrial Relations, Minister for Employment, Training and Further Education, Minister for Science and Information Economy, Minister for Youth, Minister for Volunteers) (16:09): Obtained leave and introduced a bill for an act to amend the Long Service Leave Act 1987. Read a first time.

Second Reading

The Hon. P. CAICA (Colton—Minister for Industrial Relations, Minister for Employment, Training and Further Education, Minister for Science and Information Economy, Minister for Youth, Minister for Volunteers) (16:09): I move:

That this bill be now read a second time.

The Long Service Leave Act 1987 provides entitlements to long service leave for the majority of the South Australian workforce. A worker who has 10 years or more service is entitled to 13 weeks paid leave for the first 10 years of service and 1.3 weeks leave for each subsequent year of service. A pro rata entitlement is also available on certain conditions after attaining seven years of service. In most circumstances, any untaken leave is paid to the worker upon termination of employment.

Payment for long service leave is based on the worker’s ordinary weekly rate of pay at the time of taking leave. However, if the worker’s ordinary weekly rate of pay fluctuates, certain averaging provisions apply. This bill deals only with those averaging provisions. These provisions require averaging weekly earnings over the preceding 12 months for workers employed on commission or any other system of payment by result, or by averaging the number of hours worked per week over the preceding three years for workers whose ordinary weekly hours vary.

There have been reported instances where employees have had their monetary entitlement artificially reduced due to a narrow interpretation of the averaging provisions. This can occur when an employee has had a period of unpaid leave during the relevant averaging period and that leave has been included in the averaging calculation.

Those likely to be most affected by this narrow interpretation are workers who have taken a large quantity of authorised unpaid leave. The most common form of long-term unpaid leave would be parental leave; however, family care and study leave are other examples.

The interpretation of the act is unclear for both employers and employees and should be resolved by the parliament. The narrow approach to the act as outlined is at least arguable but is clearly unsatisfactory and inequitable. Unpaid leave is otherwise not counted as service for other purposes of the act and, for consistency, should not be included in any calculations used to ascertain monetary entitlements under the averaging provisions.

Today, I introduce into this house a bill that aims to remove ambiguity from the current act and ensure a consistent approach to the treatment of paid leave and unpaid leave when calculating long service leave entitlements.

The bill has been developed through open and extensive consultation. In September 2007, SafeWork SA wrote to the state’s key industrial relations stakeholders seeking comments on a consultation bill to amend the Long Service Leave Act 1987. Most of those consulted gave in-principal support to the proposed amendments; however, some technical concerns were raised. Feedback was collated and presented to the November 2007 meeting of the Industrial Relations Advisory Committee for discussion. IRAC noted the views of those consulted and agreed to form a working group to make recommendations on issues raised by the consultation.

The working group considered the issues arising from the original consultation bill, and SafeWork SA liaised with parliamentary counsel to establish a bill that reflected the commonly agreed concepts and simplified the provision. The improved bill was finally considered at the 12 June 2008 meeting of IRAC. The key changes proposed in the bill are:

unpaid leave is now clearly disregarded from the averaging provisions;

the averaging period would now be taken to be the previous 12 months or three years of actual service (whichever the case may be), after any unpaid leave is disregarded;

the inclusion of weeks when a worker was on paid leave, when averaging weekly hours for workers whom the three-year averaging period applies; and

clarification that only whole weeks of unpaid leave are to be disregarded from the averaging calculation.

The changes introduced by the bill bring much needed clarity to the calculation of long service leave entitlements.

Long Service Leave legislation was first introduced to South Australia in 1957. The occurrence of workers taking lengthy periods of unpaid leave and subsequently returning to their employment is more common today than it ever was. The need to ensure that the act reflects the contemporary requirements of the workplace is evident. These changes eliminate the potential for ongoing uncertainty when these circumstances arise, without adding to the red tape burden on business.

The government recognises the important contribution made by all organisations and individuals who participated through the consultative process, particularly members of the Industrial Relations Advisory Committee. This collaborative approach is testimony to the capacity and commitment of all stakeholders and demonstrates that a co-operative approach results in fairer industrial relations outcomes. I commend the gill to members of the house. I seek leave to have the explanation of the clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The measure will be brought into operation by proclamation.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of Long Service Leave Act 1987

4—Amendment of section 3—Interpretation

These amendments are intended to clarify the handling of unpaid leave when calculating a worker's ordinary weekly rate of pay for the purposes of the Act. The reference to weeks when the worker was on paid leave in section 3(2)(b) of the Act gives rise to an element of doubt as to the position of unpaid leave. The provision is to be amended to provide that any week when the relevant worker was on unpaid leave is to be disregarded for the purposes of the relevant calculation and that the relevant periods for the calculation will be full periods (which need not be made up of consecutive weeks) after disregarding any weeks when the worker was not at work due to unpaid leave. Finally, it will also be made clear that all periods of paid leave may be taken into account for the purposes of making the relevant calculations.

Debate adjourned on motion of Mr Griffiths.

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