Long service leave is an important entitlement that recognises the dedication and loyalty of employees who have contributed many years of service to their employer. The Community Services sector is one where many employees remain within the sector, but frequently change employers, making it difficult for employees to become entitled to long service leave.

To address this challenge, the NSW Government has introduced a Community Services Industry Portable Long Service Leave Scheme, effective on 1 July 2025.

What is the Scheme?

The Portable Long Service Leave Scheme is a system designed to enable workers in the community services industry to accumulate their long service leave entitlements across multiple employers. Unlike traditional long service leave, which is employer-specific, the portable scheme allows continuity of service to be recognised even when employees move from one employer to another within the community services sector.

Who is eligible?

In NSW, the criteria for eligibility includes:

  • Workers must be employed in an eligible community services role covered by the scheme, for example, disability support, social, family support services, or youth work. The Community Services Sector (Portable Long Service Leave) Act 2024 lists 31 types of Community Service.
  • Employees are paid staff who are employed on a full time, part-time or casual basis and work in one of the 31 types of community service work.
  • Workers become eligible for long service leave after seven years of service to the industry with one or more employers.
  • Participation in the scheme is not mandatory for self-employed contractors, although they may elect to join the scheme if they register as workers.
  • In most instances, workers should automatically be registered for the scheme once their employer lodges their service return.
  • There are provisions to retain accrued service for workers for up to four years if a worker leaves the sector.

What must employers do?

  • Employers in the community services industry must register with the scheme by 31 July 2025 or within four weeks of employing eligible employees.
  • Employers must contribute on behalf of their employees to fund the long service leave entitlements.
  • The levy is 1.7% of the gross ordinary wage of each eligible employee, plus any self-employed contractors, who have registered for the Scheme. Late payments could result in interest and penalties being applied. The contribution is used to fund long service leave payments for workers across the sector.
  • There are a number of additional compliance obligations, such as lodging quarterly service returns and paying the levy for each eligible employee on a quarterly basis.
  • Service records of all employees must be kept for 7 years following the date the employee ceases to be employed by that employer.
  • Note that employees who appear on the first two service returns (1 July to 31 December 2025) will receive an automatic foundation worker bonus of 365 days of service credits to their record.

How does it work?

  • Employees will accrue long service leave progressively as they work in the industry. Once the qualifying period (seven years) is reached, workers will become entitled to claim their eligible long service leave.
  • Employees can apply to the scheme to access their leave entitlement, even if they no longer work for the employer(s) with whom they completed most of their service.

Does long service accrued under the “previous” system disappear?

In a word – no! All previous and existing entitlements under the Long Service Leave Act 1955 remain and are not transferred into the new scheme. Therefore records under entitlements under the 1955 Act must continue to be kept.

However, in these situations, payments made to employees under the 1955 Act are entitled to a reimbursement from the Long Service Leave Corporation for any portion of the entitlement that the employer has paid to the scheme.

For example, if an eligible employee commenced work with an employer on 1 July 2018, then, under the 1955 Act, the employee would be entitled to claim 8.667 weeks of long service leave after 10 years, If the employee was earning $1,000 gross ordinary wages per week, then the entitlement would be $8,670.

The employer would pay the employee $8,670 based on the 1955 Act. However, the employer would then claim from the Long Service Leave Corporation the portion that relates to post 1 July 2025, which in this case would be 3 years (30% of the full 10 years), which calculates as 2.60 weeks.

The employer would claim for 2.60 weeks based on the $1,000 per week from the Long Service Leave Corporation, being $2,600.

What is included in gross ordinary wages?

Gross ordinary wages include:

  • Payments made under the respective award
  • Any payments made in addition to the award
  • Shiftwork and casual loading
  • Penalty rates on normal rostered shifts for weekend work and public holiday shifts forming ordinary hours of duty (excluding overtime)
  • Certain allowances, including on call, sleepover, broken shift, first aid, medication administration, nauseous work, bilingual qualification, occasional interpreting, all-purpose allowances.
  • Annual leave (where leave taken), sick leave, personal/carer’s leave, bereavement leave, family and domestic violence leave, community service leave, ceremonial leave, public holidays, paid parental leave (when paid by the employer),
  • Workers’ compensation payments (when paid by the employer and employer is subsequently reimbursed by insurance)
  • Jury service payments.

Gross ordinary wages excludes:

  • Overtime (for full time staff), leave loading, lump sum payments for annual leave not taken, sick leave or long service leave that is paid on termination.
  • Payments in lieu of notice
  • Christmas bonuses and ex-gratia payments
  • One-off bonuses
  • Certain allowances, including travel, meal, protective clothing allowances, and payments for materials and equipment.
  • Workers’ compensation payments (when paid by the insurer to the employee)
  • Redundancy payments
  • Australian Government Paid Parental Leave Scheme

Accounting for the Scheme

Each accounting period (for example, monthly), the employer should record its liability, calculated at 1.7% of the gross ordinary wage of each employee, as follows:

Dr long service leave – expense

  Cr Amounts payable to Long Service Leave Corporation

Once payments are made to the Long Service Leave Corporation on a quarterly basis, the journal to be posted is:

Dr Amounts owing to Long Service Leave Corporation

  Cr Cash

In essence, while the legislation aims to benefit workers, it introduces new and significant financial obligations  for employers, and also changes cash flow requirements as long service payments are due under the Scheme on a quarterly basis, instead of just being paid when an employee takes long service leave. Therefore, there is a need to factor this into cash flow forecasts.

Other Resources

The NSW Government have released a template to assist employers here.

We also recommend that you subscribe to updates issued by the Long Service Leave Corporation here.

If you have any questions on the Scheme, please reach out.