Queensland organisations liable for portable long service leave should review the work undertaken by employees on new projects to see if it's resources operational work.
Under recent amendments the risk of double payment for long service leave under both Queensland's Building and Construction Industry (Portable Long Service Leave) Act 1991 (Portable LSL Act) and the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) has been reduced, where the work being undertaken is classified as "resources operational work". This in turn will reduce the cost of doing business for employers in the Queensland building and construction industry.
The Portable Long Service Leave Scheme
Under the Portable LSL Act, employees engaged in the "building and construction industry" are entitled to portable long service leave (LSL). Relevantly for the mining sector, the "building and construction industry" includes the industries of constructing, demolishing, maintaining etc. buildings, roads, railways, works for storage or supply of water, works for extracting, refining, processing or treating materials or producing or extracting products and by-products from materials, and works for conveying products, by-products or materials.
The LSL levy is paid as a percentage of the total cost of building and construction work where the work exceeds a certain threshold (set out below). The levy cannot be excluded or contracted out of.
Employers undertaking building and construction work must also give QLeave certificates of service for its employees within one month from 30 June, and within one month of each employee's termination of employment.
To be entitled to portable LSL, employees must be registered on the QLeave "register of employees" and may apply for registration at any time. QLeave may also automatically register employees from "the date the certificate of service or other information about the person is received" by QLeave. Employees accrue leave from the date of their entry into the register, however, QLeave can recognise service accrued before this in certain circumstances. Employees cannot claim LSL if they have already taken or received LSL under the Industrial Relations Act 1999 (Qld) or from any other source (however arising).
Employers must register with QLeave upon which they are added to the "register of employers."
Changes to the Portable Long Service Leave Scheme
The Portable LSL Act and the Construction Industry (Portable Long Service Leave) Regulations 2013 (Portable LSL Regs) have been amended effective 1 July 2014, and the changes proposed in Construction and Tourism (Red Tape Reduction) and Other Legislation Amendment Bill 2014 were incorporated.
Queensland Resources Council Chief Executive Michael Roche welcomes the changes and has said "the changes will provide significant financial relief to the resources sector in both operational and construction phases at a time when the sector needs to reduce costs to stay in business".
Amendments to the Portable LSL Regs change the percentage at which the levy is charged and the project threshold from which applies, specifically:
- the LSL levy has been reduced from 0.3% to 0.25% of the cost of building and construction work;
- the project threshold that triggers payment of the levy has been increased from $80,000 to $150,000; and
- a tiered levy now applies to projects over $1 billion.
In addition, the amendments also overcome the problem where some companies were paying both the LSL levy under the Portable LSL Act (which covers building and construction work) and the LSL levy under the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth) (Coal LSL Act) (which covers working relating to black coal mines) where the relevant work was building and construction work in connection with a black coal mine.
In QRC's latest press release, Mr Roche noted that:
"...the application of the QLeave levy on the resources sector had gone far beyond the original intent of the [Portable LSL] Act, which was to provide a system of portable long service leave for the highly transient building and construction industry workers. An unintended consequence was for routine mining and gas industry operational activities to be captured by the levy arrangements".
To address this, the Portable LSL Regs have been amended so that the LSL levy is not payable where the building and construction work is also "resources operational work." Resources operational work generally covers below ground work and includes activities such as:
- mining under a tenement, or separating, producing, processing, refining, treating substances that are a product of mining;
- mining development activities below the mine's portal;
- purchasing, mobilising and constructing mobile plant and equipment (other than a dragline) for a resources operation;
- ancillary or incidental generation, supply or transmission of electric power or steam for resources operations; and
- maintaining or repairing fixed facilities, plant and equipment (other than a shutdown).
However, resources operation work does not cover any of the following:
- erecting a conveyor belt to be used substantially on the surface of land;
- constructing, deconstructing and reconstructing a dragline in a new location if it has not moved under its own power;
- constructing, deconstructing or reconstructing fixed plant or equipment; and
- a shutdown of fixed plant or equipment.
Therefore, where work being conducted falls under the definition of resources operational work, the LSL levy will not need to be paid to QLeave. However, payments may still be required under the Coal LSL Act.
Overall, these amendments are changes to the payment of the levy only and QLeave has indicated that the amendments are not intended to affect employees' eligibility to apply for LSL with QLeave.
It is important to note the amendments do not purport to have any retrospective application. This means that existing notifications of building and construction work will not be affected. Rather the amendments apply to all new projects notified to QLeave on or after 1 July 2014.
Organisations liable for LSL should review the work undertaken by employees on new projects and determine whether the work is resources operational work. This review will assist organisations in determining whether a LSL levy is payable and to which entity.
The impact of calculating the levy incorrectly can be hundreds of thousands of dollars, depending on the size of the project. If you would like assistance on considering the impact for your project please contact us.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.