Expanding long service leave to food, beauty and hospo? The Opposition says consequences will be ‘dire’

A proposed expansion of the Territory’s Portable Long Service Scheme will have a “disproportionate” impact on female-owned small businesses if it passes into law, according to Shadow Business Minister Leanne Castley.

A Committee Inquiry into the amendment bill overall recommended it be passed, but Chair Leanne Castley has issued a dissenting report arguing the “purported benefits” are “risible”.

“The Bill will impose additional direct financial costs and substantial administrative burdens on Canberra small businesses,” she said.

Portable Long Service Leave is leave given to an employee who has worked in the same industry for a specific amount of time.

The portable schemes allow employees to transfer from employer to employer without losing the service already accrued within the covered industry.

The bill’s expansion would see the scheme cover the hairdressing, beauty, accommodation and food services sectors.

An extension of the scheme to the real estate, travel agency and retail industries has also been foreshadowed.

In her report, Ms Castley argued the ACT Government had not proved that involuntary labour mobility was a feature of the industries to which the scheme would be extended.

“Mobility in these industries is voluntary rather than associated with the nature of these industries,” she said.

“Indeed, employment in these industries is often casual or transient.”

Ms Castley also drew issue with an apparent lack of analysis of how this amendment would benefit employees or the economy.

“The accepted purpose of long service leave is to reward loyal employees and to discourage staff turnover,” she said.

“The ACT Labor-Greens government has also not explained what will happen to the money invested from quarterly long service leave payments for the large number of employees who won’t stay in the industry long enough to qualify or who transfer to different occupations.”

Overall she argued the consequences for some employees could be “dire” and the “opposite to the Bill’s purported intent”.

The Committee Inquiry report noted it was concerned feedback was “largely one-sided” as most submissions were from business owners and industry groups in the hairdressing sector.

It outlined the scheme’s advantages, saying it would boost employee well-being, provide equity for women in insecure work and tax benefits for employers, and support the retention of skilled and experienced workers within their industry.

However, a number of negatives were pointed out in submissions by stakeholders who argued the traditional long service leave model was enough.

One Canberra salon owner said introducing portable long service leave would remove the incentive for apprentices to stay where they were trained.

“Every time I lose a senior hairdresser or have a change in team member, the cost to my business is massive,” she wrote.

“This is why the incentive of [traditional] long service leave is something I have always been grateful to refer to as an incentive to stay in our workplace long term.”

Registered employers are required under the scheme to pay a levy of 1.07 to 2.10 per cent of a person’s wage to finance that employee’s long service leave.

The Canberra Business Chamber argued in its submission this would create additional costs and admin requirements for employers.

Both the Australian Industry Group and Council of Small Business Organisations Australia (COSBOA) were concerned that expanding the scheme into the hairdressing and beauty industries could negatively impact predominantly women-owned businesses.

“The proposed changes would see many salon owners close their business or be forced to employ less staff, including apprentices,” COSBOA argued.

However, Industrial Relations Minister Mick Gentleman, who introduced the amendment bill last November, said the government had been specifically asked to include these industries in the scheme in previous motions – the hairdressing sector in 2020 and the contract catering industry in 2021.

He described it as “unfortunate” the Opposition wasn’t supporting a scheme that he said would benefit workers.

“Businesses who treat their employees well will encounter no issues with this proposal,” Mr Gentleman said.

“The proposed changes will not incentivise employees to move from business to business.”

He argued the scheme also gave workers more financial security and flexibility.

“For many of us, long service leave is an entitlement that we already receive in our jobs,” Mr Gentleman said.

“By making sure it is portable across as many industries as possible, we are providing more equal access and making sure the people who do these important jobs receive the benefits other Canberrans already enjoy.”

If the amendment passes, employers will be given a two-year grace period to prepare for the change.