Unpacking the ALP’s proposed portable leave policy


In his first big policy speech for 2021, Labor leader Anthony Albanese pledges more security for insecure workers, including the introduction of a federal portable leave policy. But is his plan actually feasible?

In the next instalment of the Great IR Debate, the ALP this week released a soft launch of its IR policy ahead of a possible federal election in 2021.

In his first big policy speech of 2021, Labor leader Anthony Albanese set his focus on providing more security for insecure gig workers and the casual workforce.

The ALP leader is proposing a makeover of Australia’s industrial relations laws to offer a “better deal” for those most impacted by a COVD-riddled 12 months – such as those working for Uber, AirTasker and Deliveroo, just to name a few.

His proposed plan – which is yet to be formalised – includes a cap on fixed-term contracts and the introduction of a federal portable leave policy, which would allow insecure workers to take accrued leave with them as they moved between jobs.

“These are basic conditions that Australians know and understand that they deserve,” Albanese said during his speech in Brisbane on Wednesday.

So, is Albanese’s plan actually feasible? As is the case with this ongoing IR battle, some would say, unequivocally, ‘yes’. Others stand firm in their belief that it would cause more harm than good.

IR minister Christian Porter hit back, saying this would be “an extinction event for a range of businesses” and suggesting it could amount to a business tax of approximately $20 billion.

This comes off the back of the ALP’s recent refusal to back the omnibus IR reform bill.

The pros and cons of a portable leave policy work

The concept of  a portable leave policy isn’t new. State governments have previously created transferable long service leave (LSL) frameworks for specific industries – such as the construction, mining, cleaning and community service sectors – as LSL processes are determined on a state government level.

“How it works is that state governments set up a corporation of some kind and levies [around three per cent of LSL] are paid into that, usually by employers, and details about the hours worked and pay rates of the individual employees are included,” says Michael Byrnes, partner at law firm Swaab.

“So when it comes time to take that [LSL] leave, the money comes out of that corporation.”

Albanese is proposing a similar scheme, at a federal level, that would also include annual leave and sick leave entitlements.

In a media statement, Porter said this could leave casual workers with more leave provisions than permanent workers. 

“It’s clear what Anthony Albanese is saying he would do; what is totally unclear is how he will do it and who will pay for it? Either he is proposing that businesses are hit with a new tax of up to $20 billion after a pandemic… or he is proposing to cut the pay of all casual workers by up to 25 per cent. These are the only two options,” says Porter.

Shadow industrial relations minister Tony Burke says this simply isn’t true.

“We’re simply proposing that we would consult with state and territory governments and with unions and industry to work out where it might be appropriate for portable entitlements to be extended,” Burke told The Australian.

While Byrnes says the scheme would likely be funded in the same way as state-based LSL setups, he adds that it’s not the only way.

“Without getting into the weeds, but just for the sake of completeness, there could be other ways to fund the scheme. For example, in NSW the portable long service landscape is funded by a levy on construction projects. So, there might be an alternative way of funding [this proposed policy], such as a levy on meal deliveries, for example,” Byrnes adds.

While this is a possibility, he says it’s a fair assumption that it will come out of employers’ pockets.

“Whether or not a scheme like this acts as a disincentive to employ casual/gig workers remains to be seen, but it would likely make hiring these workers more expensive.”

This is “conceptually messy”, says Byrnes, because it brings up a lot of the previous debates around double-dipping off the back of the WorkPac V Rossatto case. However, he adds that there’s somewhat of a groundswell now when it comes to providing gig and casual workers with adequate protection and to shield them from exploitation.

“There’s a strong sentiment from the community that regulatory reform is needed in relation to gig workers,” says Byrnes.

Burke told the ABC that if this policy was fleshed out and implemented, it would be rolled out in one industry at a time, adding “it’s not something that would just be unilateral legislation through the parliament”.

Portable leave policy could benefit gig workers
Image: Food delivery rider.

Proposed cap on fixed-term contracts

As part of his speech, Albanese also proposed a cap on fixed-term contracts as another means to bolster security for contract workers.

“That would mean contracts would either be capped at the two year mark or after the first contract renewal, whichever comes first,” says Byrnes. 

“For instance, someone could be on one contract for six months, then an employer could renew for a further six months. If they wanted to put them on another contract, it’s at this point that they’d be required to offer a permanent position.”

Many would argue that as businesses recover from the pandemic, having access to on-supply talent that shifts with the ebbs and flows of business demand is crucial for recovery. And different industries would have to account for their seasonal trading peaks too.

However, Byrnes says if an employer is in a position where they need someone’s services for longer than two years (or one contract renewal) then you could make a solid argument in favour of them being a permanent resource to the business.

“The idea is to avoid employers constantly turning over fixed term contracts, which then becomes in effect, ongoing permanent employment,” he adds.

Other proposed ALP IR changes

There will be changes to the Fair Work Act in the near future, it’s just not clear what those changes might look like at the moment.

The ALP, Greens and various union groups have made it very clear that the proposed temporary suspension of the Better Off Overall Test is a major concern regarding the IR reform bill. Byrnes describes it as a “lightning rod for criticism” and that some say it’s “harking back to the WorkChoices era”. So it’s unlikely that the current IR bill will be passed without making amendments to the BOOT proposal.

Albanese announced that, under a Labor government, he would seek to amend the Fair Work Act to “ensure job security is considered when a pay deal is registered or changes are sought to the award safety net”, Smart Company reports.

This would look like Labor legislating a test to determine when work can be classified as casual, says Byrnes. “It would narrow the circumstances in which an employee is considered casual… it means that more employees would have the job security that permanent employment brings.”

Other promised made in Albanese’s speech include:

  • A commitment to defend the increase in the super guarantee to 12 per cent.
  • Extend the powers of the FWC to include “employee-like” forms of work, allowing it to better protect people in new forms of work, like app-based gig work, from exploitation and dangerous working conditions.
  • Ensure that workers employed through labour hire companies receive no less than workers employed directly.
  • Assess where temporary workers are being used inappropriately within the Australian Public Service.

“These IR commitments are just the first in a series Labor will make before the next election to deliver more secure jobs with better pay because Labor is on the side of workers,” Albanese said.

The to and fro between Labor and the Coalition on all things industrial relations makes it hard to assess exactly how likely these changes are to occur. 

It appears that Labor is attempting to rejig an iteration of its successful 2007 WorkChoices campaign approach, which saw John Howard’s leadership topple after serving the second-longest term in Australia’s history. The Liberal government, however, continues to paint the ALP as creating “vague promises” that ignore the plight of recovering business owners in the age of the pandemic.

The only thing that’s truly clear is that industrial relations policies will be the lynchpin of both side’s political campaigns over the next few months.

“At this stage, Albanese’s promises have just taken the form of a speech. That’s not a criticism, but there hasn’t been a comprehensive policy created and, as with many of these things, the devil can be in the detail. This is certainly going to be an area of great interest as we draw closer to the next election, whenever that might be.”

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Dr Brenda Scott-Ladd
Dr Brenda Scott-Ladd
7 months ago

Porters cost argument just does not stack up. Continued exploitation of low paid workers is just downright immoral. The efforts, uncertainty and risk for these worker deserves fair compensation. HR Managers who are on fair wages and conditions, should recognise that fairness to employees is better for employers.

Tracey Mottershead
Tracey Mottershead
7 months ago

Porter’s cost argument does indeed stack up. Having to pay into a leave scheme on top of casual loadings will be prohibitive to many employers, unless their loadings are reduced. Yes, casual workers deserve fair compensation, and their exploitation needs addressing but this is separate to the cost argument. There will be no compensation paid at all if employers are ignored in this scenario.

Dean Fraser
Dean Fraser
7 months ago

In the case of food delivery – if you can afford to pay $10 you can afford $12 – the employer does not ‘pay’. They would and should ‘pay’ if their ‘gig employee’ is killed or injured. And for those who argue about ever increasing costs – the market will cap that. Pay ALL people fairly.

More on HRM

Unpacking the ALP’s proposed portable leave policy


In his first big policy speech for 2021, Labor leader Anthony Albanese pledges more security for insecure workers, including the introduction of a federal portable leave policy. But is his plan actually feasible?

In the next instalment of the Great IR Debate, the ALP this week released a soft launch of its IR policy ahead of a possible federal election in 2021.

In his first big policy speech of 2021, Labor leader Anthony Albanese set his focus on providing more security for insecure gig workers and the casual workforce.

The ALP leader is proposing a makeover of Australia’s industrial relations laws to offer a “better deal” for those most impacted by a COVD-riddled 12 months – such as those working for Uber, AirTasker and Deliveroo, just to name a few.

His proposed plan – which is yet to be formalised – includes a cap on fixed-term contracts and the introduction of a federal portable leave policy, which would allow insecure workers to take accrued leave with them as they moved between jobs.

“These are basic conditions that Australians know and understand that they deserve,” Albanese said during his speech in Brisbane on Wednesday.

So, is Albanese’s plan actually feasible? As is the case with this ongoing IR battle, some would say, unequivocally, ‘yes’. Others stand firm in their belief that it would cause more harm than good.

IR minister Christian Porter hit back, saying this would be “an extinction event for a range of businesses” and suggesting it could amount to a business tax of approximately $20 billion.

This comes off the back of the ALP’s recent refusal to back the omnibus IR reform bill.

The pros and cons of a portable leave policy work

The concept of  a portable leave policy isn’t new. State governments have previously created transferable long service leave (LSL) frameworks for specific industries – such as the construction, mining, cleaning and community service sectors – as LSL processes are determined on a state government level.

“How it works is that state governments set up a corporation of some kind and levies [around three per cent of LSL] are paid into that, usually by employers, and details about the hours worked and pay rates of the individual employees are included,” says Michael Byrnes, partner at law firm Swaab.

“So when it comes time to take that [LSL] leave, the money comes out of that corporation.”

Albanese is proposing a similar scheme, at a federal level, that would also include annual leave and sick leave entitlements.

In a media statement, Porter said this could leave casual workers with more leave provisions than permanent workers. 

“It’s clear what Anthony Albanese is saying he would do; what is totally unclear is how he will do it and who will pay for it? Either he is proposing that businesses are hit with a new tax of up to $20 billion after a pandemic… or he is proposing to cut the pay of all casual workers by up to 25 per cent. These are the only two options,” says Porter.

Shadow industrial relations minister Tony Burke says this simply isn’t true.

“We’re simply proposing that we would consult with state and territory governments and with unions and industry to work out where it might be appropriate for portable entitlements to be extended,” Burke told The Australian.

While Byrnes says the scheme would likely be funded in the same way as state-based LSL setups, he adds that it’s not the only way.

“Without getting into the weeds, but just for the sake of completeness, there could be other ways to fund the scheme. For example, in NSW the portable long service landscape is funded by a levy on construction projects. So, there might be an alternative way of funding [this proposed policy], such as a levy on meal deliveries, for example,” Byrnes adds.

While this is a possibility, he says it’s a fair assumption that it will come out of employers’ pockets.

“Whether or not a scheme like this acts as a disincentive to employ casual/gig workers remains to be seen, but it would likely make hiring these workers more expensive.”

This is “conceptually messy”, says Byrnes, because it brings up a lot of the previous debates around double-dipping off the back of the WorkPac V Rossatto case. However, he adds that there’s somewhat of a groundswell now when it comes to providing gig and casual workers with adequate protection and to shield them from exploitation.

“There’s a strong sentiment from the community that regulatory reform is needed in relation to gig workers,” says Byrnes.

Burke told the ABC that if this policy was fleshed out and implemented, it would be rolled out in one industry at a time, adding “it’s not something that would just be unilateral legislation through the parliament”.

Portable leave policy could benefit gig workers
Image: Food delivery rider.

Proposed cap on fixed-term contracts

As part of his speech, Albanese also proposed a cap on fixed-term contracts as another means to bolster security for contract workers.

“That would mean contracts would either be capped at the two year mark or after the first contract renewal, whichever comes first,” says Byrnes. 

“For instance, someone could be on one contract for six months, then an employer could renew for a further six months. If they wanted to put them on another contract, it’s at this point that they’d be required to offer a permanent position.”

Many would argue that as businesses recover from the pandemic, having access to on-supply talent that shifts with the ebbs and flows of business demand is crucial for recovery. And different industries would have to account for their seasonal trading peaks too.

However, Byrnes says if an employer is in a position where they need someone’s services for longer than two years (or one contract renewal) then you could make a solid argument in favour of them being a permanent resource to the business.

“The idea is to avoid employers constantly turning over fixed term contracts, which then becomes in effect, ongoing permanent employment,” he adds.

Other proposed ALP IR changes

There will be changes to the Fair Work Act in the near future, it’s just not clear what those changes might look like at the moment.

The ALP, Greens and various union groups have made it very clear that the proposed temporary suspension of the Better Off Overall Test is a major concern regarding the IR reform bill. Byrnes describes it as a “lightning rod for criticism” and that some say it’s “harking back to the WorkChoices era”. So it’s unlikely that the current IR bill will be passed without making amendments to the BOOT proposal.

Albanese announced that, under a Labor government, he would seek to amend the Fair Work Act to “ensure job security is considered when a pay deal is registered or changes are sought to the award safety net”, Smart Company reports.

This would look like Labor legislating a test to determine when work can be classified as casual, says Byrnes. “It would narrow the circumstances in which an employee is considered casual… it means that more employees would have the job security that permanent employment brings.”

Other promised made in Albanese’s speech include:

  • A commitment to defend the increase in the super guarantee to 12 per cent.
  • Extend the powers of the FWC to include “employee-like” forms of work, allowing it to better protect people in new forms of work, like app-based gig work, from exploitation and dangerous working conditions.
  • Ensure that workers employed through labour hire companies receive no less than workers employed directly.
  • Assess where temporary workers are being used inappropriately within the Australian Public Service.

“These IR commitments are just the first in a series Labor will make before the next election to deliver more secure jobs with better pay because Labor is on the side of workers,” Albanese said.

The to and fro between Labor and the Coalition on all things industrial relations makes it hard to assess exactly how likely these changes are to occur. 

It appears that Labor is attempting to rejig an iteration of its successful 2007 WorkChoices campaign approach, which saw John Howard’s leadership topple after serving the second-longest term in Australia’s history. The Liberal government, however, continues to paint the ALP as creating “vague promises” that ignore the plight of recovering business owners in the age of the pandemic.

The only thing that’s truly clear is that industrial relations policies will be the lynchpin of both side’s political campaigns over the next few months.

“At this stage, Albanese’s promises have just taken the form of a speech. That’s not a criticism, but there hasn’t been a comprehensive policy created and, as with many of these things, the devil can be in the detail. This is certainly going to be an area of great interest as we draw closer to the next election, whenever that might be.”

guest
3 Comments
Inline Feedbacks
View all comments
Dr Brenda Scott-Ladd
Dr Brenda Scott-Ladd
7 months ago

Porters cost argument just does not stack up. Continued exploitation of low paid workers is just downright immoral. The efforts, uncertainty and risk for these worker deserves fair compensation. HR Managers who are on fair wages and conditions, should recognise that fairness to employees is better for employers.

Tracey Mottershead
Tracey Mottershead
7 months ago

Porter’s cost argument does indeed stack up. Having to pay into a leave scheme on top of casual loadings will be prohibitive to many employers, unless their loadings are reduced. Yes, casual workers deserve fair compensation, and their exploitation needs addressing but this is separate to the cost argument. There will be no compensation paid at all if employers are ignored in this scenario.

Dean Fraser
Dean Fraser
7 months ago

In the case of food delivery – if you can afford to pay $10 you can afford $12 – the employer does not ‘pay’. They would and should ‘pay’ if their ‘gig employee’ is killed or injured. And for those who argue about ever increasing costs – the market will cap that. Pay ALL people fairly.

More on HRM