- Published:
- Thursday 31 October 2024 at 9:05 am
The problem that needed attention
The regulation of long service leave in Victoria, Australia
Most Victorian employees are covered by and entitled to long service leave in accordance with the Long Service Leave Act 2018 (the Act), unless they derive their long service leave entitlement from another source. In short, almost all Victorian workers will have a right to long service leave, but that right might be under the Act, an enterprise agreement, a pre-modern award or some other workplace law.
After at least 7 years’ continuous employment with one employer, an employee is entitled to:
- take their long service leave
- be paid any unused long service leave entitlement if employment ends.
The regulator and its focus
Wage Inspectorate Victoria, a state-based labour inspectorate, is responsible for regulating long service leave law in Victoria. It is a statutory authority, governed by a Commissioner and stands independently of Government.
The Wage Inspectorate’s functions are to provide information and advice to employers, employees and the community regarding their rights and obligations under the Act, and to ensure compliance with and enforcement of provisions of the Act.
Long service leave is a long-standing workplace entitlement in Australia, but the Wage Inspectorate continues to see breaches of the law from large employers, largely due to payroll errors and miscalculations. On rare occasions, there are employers who deliberately break the law by withholding entitlements for a range of reasons.
Most errors may seem simple, but they can lead to Victorians not receiving their hard-earned money or missing the opportunity to take long service leave to travel, spend time with family or recharge their batteries.
Finding breaches
The approach
The Wage Inspectorate received a complaint from an employee who alleged their employer had discounted a period of unpaid leave for long service leave purposes. This was consistent with the employer’s enterprise agreement but not with Victoria’s long service leave laws.
This motivated the Wage Inspectorate to review a targeted selection of large Victorian employers to determine whether their enterprise agreements aligned with the state’s long service leave laws.
Enterprise agreements are publicly available documents and served as an initial point of data collection and verification to inform this work. Choosing to first undertake a desktop audit of the provisions of the enterprise agreements meant the Wage Inspectorate could save time and resources by not having to approach businesses directly in the first instance, to request documents.
It also meant where potential inconsistencies were found, they would likely be systemic and potentially affect hundreds or thousands of employees, maximising the impact of the Inspectorate’s work.
“We wanted to take an approach that would maximise the impact of our time and resources. We will always address the complaints that come through our door, but we identified a technique that allowed us to help hundreds of employees at once.” – Robert Hortle, Commissioner of Wage Inspectorate Victoria
Ensuring any enterprise agreement errors were fixed meant the Wage Inspectorate could address the root cause of any underpayments and educate the broader community of employers.
Looking at enterprise agreements was a way the Wage Inspectorate could ensure any subsequent full investigation, which can be labour intensive, would have impact.
“Enterprise agreements can be set and forget, at least for the length of the agreement, but we were able to tap into a practice that is clearly not up to scratch.” Robert Hortle, Commissioner of Wage Inspectorate Victoria
The audit
As part of this audit, the Wage Inspectorate included Australia’s second largest Telco, Optus, in its sample field. The Wage Inspectorate identified a clause in Optus’ enterprise agreement that stated that any period of unpaid leave over 5 days does not count towards continuous service.
This provision is inconsistent with Victoria’s laws which state that any amount of unpaid leave less than 52 weeks does amount to continuous service.
This inclusion of this clause suggested the long service leave entitlements of Optus employees, of which there are around 7000 nationally, had probably been miscalculated.
The investigation and findings
The Wage Inspectorate then commenced a full investigation into Optus in Victoria to confirm long service leave entitlements had been underpaid, and to establish the extent of any underpayments.
The investigation uncovered:
- 9 former employees had been underpaid their long service leave entitlements. Individual underpayments ranged from $652 to $1,891, with some employees not receiving the money they were owed until 10 months after their employment ended.
- 560 current employees had had been under allocated $218,000 worth of long service leave. These under-accrual to current employees did not represent a contravention of the Act, but Optus did have to adjust leave balances.
The prosecution and sentencing
In March 2021, the Wage Inspectorate filed charges against Optus for failing to pay 5 former employees their full long service leave entitlement on the day their employment ended, despite them completing at least 7 years’ service.
The Wage Inspectorate later applied to amend the charges, considering the offences as continuous from the date of each employee’s departure until they received their outstanding long service leave entitlements. That is, a penalty could apply for each and every day the entitlement was not paid.
On 17 December 2021, Magistrate Foster granted the Wage Inspectorate’s application to amend the charges, but Optus then filed a motion in the Victorian Supreme Court seeking judicial review of that decision.
In May 2023, the Supreme Court of Victoria agreed with Magistrate Foster that section 9(2) of the Act provides for a continuing offence, and that there was no error in their decision to grant the Wage Inspectorate leave to amend the charges.
This confirmed that long service leave charges are a continuing offence, which enabled the Wage Inspectorate to charge future matters as continuing offences, including matters involving two of Australia’s biggest brands - the Commonwealth Bank and Woolworths.
“We persisted and took this matter as high as it needed to go in order to clarify the law.” – Robert Hortle, Commissioner of Wage Inspectorate Victoria
On 14 June 2024, Optus pleaded guilty in the Melbourne Magistrates’ Court to underpaying more than $6000 in outstanding long service leave entitlements.
Optus was fined $13,000 and ordered to pay $15,000 in costs. His Honour Magistrate Sonnet noted that if not for Optus’s cooperation with the Wage Inspectorate, he would have imposed a fine of $30,000.
The outcome
Optus’ enterprise agreement was in direct conflict with the law, leading to former staff being out of pocket and current staff being unaware of their full leave entitlement.
The Wage Inspectorate’s investigation led to:
- Optus providing an additional $218,000 worth of long service leave to approximately 560 current Victorian employees who hadn’t been allocated their full entitlement
- Optus back-paying 9 former employees who didn’t receive the correct long service leave entitlement when their employment ended
- The Wage Inspectorate charging Optus for failing to pay 5 of those former employees their full long service leave entitlement on the day their employment ended.
Complying with Victoria’s workplace laws should be front of mind for large businesses. Victorians expect them to get this right.
If it hadn’t been for the Wage Inspectorate being proactive and identifying the problem in Optus’ enterprise agreement, the issue would have continued to affect hard-working employees.
Workers would have lost out and Optus would have been exposed to more legal risk through more underpayments.
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