Big businesses will owe millions in long service leave following court rulings

Recent judicial decisions surrounding the scope of the construction industry could have major ramifications for big-time employers.

The Victorian Supreme Court has ruled in favour of LeavePlus (CoInvest Limited), the regulator of portable long service leave for the construction industry in Victoria, against companies Detector Inspector and EnergyAustralia over the characterisation of construction work.

The decisions of both cases have confirmed that, regardless of the main depiction of their employer’s business, employees who perform construction duties across Victoria are now entitled to portable long service leave.

If construction work contributes to the overall purpose of a business, then the employee is entitled to portable long service leave entitlements.

When defining what that construction work looks like, the Supreme Court said that for employees at Detector Inspector, operations such as the mandatory safety checks and maintenance of residential property systems, including smoke alarms, and electrical and gas appliances, qualify as construction work.

“We’ve always understood that construction work under the LeavePlus scheme extends beyond work that is done on new construction sites, and the outcomes of these cases have provided much-needed clarity around that understanding,” chief executive of LeavePlus, Craig Bell, said.

“If you employ workers performing construction work, you’re covered by the scheme even if you wouldn’t describe your business ordinarily as being in the construction industry.”

Bell argued that the decision is a warning shot to the “many thousands of employers in Victoria who are currently not complying with their obligations to pay long service leave charges.”

“These court decisions clarify the inclusion of industries that may have previously doubted their participation in the LeavePlus scheme.

“Whether they are providing services in the energy, rail, or telecommunications, or any other industry, these rulings invite any business with employees that perform construction work to do the right thing and contribute to LeavePlus in accordance with the law.”

According to Bell, LeavePlus are set to use the court's findings as an accountability and educational reference for employers in key industries across Victoria, offering them an opportunity to comply with the scheme as part of the “regulator’s initial round of industry audits.”

Jenny Acton, chair of the board of directors at LeavePlus, stressed the importance of the Supreme Court’s decision pertaining to the future of the scheme.

“These decisions provide essential clarity on the scope of the LeavePlus scheme and are a crucial step towards creating a more equitable and stable framework for long service leave in the construction industry.”

As reported by The Australian Financial Review, the estimated wage bill for EnergyAustralia and Detector Inspector is set to be around $800,000 a year for workers.