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Recent judicial decisions in the Victorian Supreme Court pertaining to the definition of construction work could hold massive ramifications for employers across various sectors.
The Victorian Supreme Court recently handed down major decisions in favour of LeavePlus (CoInvest Limited), the Victorian portable long service leave regulator based on the characterisation of construction work.
LeavePlus was successful against companies Detector Inspector and EnergyAustralia, with the court finding 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.
According to the Supreme Court, if construction work contributes to the overall purpose of a business, then the employee is entitled to portable long service leave entitlements. For EnergyAustralia, this meant maintenance and repair of power generation infrastructures was considered construction work.
For Detector Inspector, the court found that any maintenance on residential property systems, such as maintenance on smoke alarms and electrical and gas appliances, was classed 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,” Craig Bell, chief executive of LeavePlus, said.
Employers long service leave obligations
HR Leader reached out to Paul O’Halloran, employment and safety partner at global law firm Dentons, who explained the flow-on effect this distinction has on employers’ obligations regarding portable long service leave.
“The confirmation of a broader definition of ‘construction industry’ means that all businesses [that] employ workers to perform construction work may be liable for millions of dollars of portable long service leave entitlements,” O’Halloran said.
“The liability could go back years, and it will not matter how tangential or minimal the construction is to the primary purpose of the business.”
The estimated wage bill that O’Halloran alludes to is estimated to be around $800,000 a year for workers.
“Employers should take care to review their workforce to ensure that they are complying with their obligations to contribute to long service leave, particularly if they believe they have not been caught under the provisions previously, as the LeavePlus fund turns its eye to non-compliant employers.
“Employers may want to ensure their pre-engagement screening processes prepare them for obligations relating to incoming workers,” he said.
“With the government committing to considering nationalising portable long service leave if re-elected, these decisions could soon apply across Australia.”
Speaking to HR Leader, an EnergyAustralia spokesperson confirmed that the company is considering whether to appeal the Supreme Court’s decision.
“EnergyAustralia acknowledges the decision of the Supreme Court of Victoria, however, maintains its view that the Yallourn Power Station (and broader EnergyAustralia business) is not in the construction industry,” the spokesperson said.
“As one of the country’s largest gentailers, EnergyAustralia is committed to delivering safe and reliable electrical power to our customers and does not provide maintenance services to the power stations of other organisations or to the general public … EnergyAustralia is considering whether to appeal the decision.”
Simon MacIsaac, solicitor at Herbert Smith Freehills, touched on some of the long-term effects that this characterisation could have on different sectors across varying regions moving forward.
“This is a reminder for employers outside the traditionally understood ‘construction industry’ to reconsider whether they may be covered by applicable portable LSL schemes in the jurisdictions in which they operate,” MacIsaac said.
“It is particularly important for employers in sectors, including energy, mining and manufacturing, that are likely to have substantial ‘in-house’ workforces responsible for maintaining and repairing structures and equipment.”
“In the longer term, if the EnergyAustralia decision is upheld, it is possible that Victoria’s portable LSL scheme may have the unintended consequence of discouraging some businesses from employing their own maintenance or repair teams.”
According to MacIsaac, portable LSL schemes vary depending on the state, with each legislation and jurisdiction holding different outlooks on who is eligible.
“The Supreme Court’s decision is confined to the Victorian legislation. While all other Australian states and territories have portable LSL schemes for the construction industry, the underlying legislation in each jurisdiction is unique,” MacIsaac said.
“For example, in some jurisdictions like New South Wales and Western Australia, employees are only eligible to participate in the portable LSL scheme for the construction industry if they fit within certain award classifications.”
“Businesses that operate outside Victoria should be very cautious about drawing any direct conclusions from this case. Nonetheless, employers would be wise to generally take note of the decision and to re-assess their compliance with the portable LSL schemes in the jurisdictions in which they operate.”
As it stands, a LeavePlus spokesperson confirmed to HR Leader that they have not received an appeal decision from either EnergyAustralia or Detector Inspector on their respective cases.
RELATED TERMS
An employee is a person who has signed a contract with a company to provide services in exchange for pay or benefits. Employees vary from other employees like contractors in that their employer has the legal authority to set their working conditions, hours, and working practises.
Kace O'Neill
Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.
