Upcoming Changes to Long Service Leave Entitlements in WA

By Justin Lillyman

On 16 December 2021, the Industrial Relations Legislation Amendment Bill 2021 (IRLA Act) was passed by the State WA Parliament.

These laws are expected to become law sometime between April – June 2022.

The IRLA Act amends the Industrial Relations Act 1979 (IR Act), the Long Service Leave Act 1958 (LSL Act), the Minimum Conditions of Employment Act 1993 (MCE Act) and the Public and Bank Holidays Act 1972 (PBH Act).

The critical changes for the Real Estate industry related to the amendments to the LSL Act.

Long Service Leave

The IRLA Act will make significant amendments to the Long Service Leave Act 1958 (WA) (LSL Act). The amendments are intended to:

* change what constitutes continuous service for the purpose of accruing leave;

* restrict the cashing out of long service leave;

* replace the transmission of business provision with a broader transfer of business test;

* provide greater flexibility in the taking of leave;

*  establish penalties for breaches of the Act.

Contracting out of LSL

The LSL Act currently provides that an employee and employer may agree to forgo the entitlement to LSL provided the employee receives an adequate benefit in lieu.

The IRLA Act seeks to include two new restrictions being:

  1. That agreement to an alternative benefit cannot be reached before the employee has accrued the benefit, i.e. has been employed for at least 10 years. This provision is specifically designed to prevent the long-standing practice within the real estate industry in which sales representative receive a higher commission for the duration of their employment which pre-pays the employee’s entitlement to LSL. This practice recognises that employees in this industry frequently move between businesses and would otherwise not receive the entitlement.
  1. A requirement that the benefit must be paid at an amount not less than the amount the employee would have been paid had they taken the leave. This provision limits the scope of the provision to a cashing out arrangement. Whilst this is reflective of how this clause is generally utilised it will limit the scope as to what may be agreed to by way of an alternative benefit (e.g. other forms of additional leave).

What Does This All Mean for the Agency and its Employee’s

Once the IRLA Act has become enacted as law, then the existing contractual arrangements whereby an employee’s LSL entitlements are paid in advance through the incentive commission received by the employee will no longer be permitted.

In practice this means that when an employee reaches 10 years employment with the same agency (or leaves the same agency after 7 years employment), then the employee will be entitled to take the statutory period of paid LSL or alternatively have it cashed out in accordance with the LSL Act.

Any amount of money an employee has previously been paid by the Agency in advance of the payment of LSL cannot be offset under the new amendments in relation to an employee either taking the paid period of LSL or cashing it out.

As a result of the changes the employee’s contracts of employment will need to be varied to reflect the amendments to the LSL Act.

In particular any reference in the employment contracts to the Employee and Agency agreeing to a certain percentage of the Incentive Commission (i.e. 1.7%) being paid in advance of LSL will need to be removed by variation to the contract.

Once the IRLA Act becomes law, the REEFWA contracts of employment will be updated on the member website to reflect these legislative changes.

Do not hesitate to contact REEFWA on (08) 9365 7510 for any further information or assistance.

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