Construction Industry Long Service Leave Regulations 2018

Allowable absence (regulation 4) determines which periods a worker can be absent from work yet still accrue continuous service for long service leave. The regulation lists public holidays, paid annual leave (or an allowance representing it, capped at 20 working days per year), paid sick leave (or an allowance representing it, capped at 10 working days per year), long service leave under either the Act or the Long Service Leave Act 1987, and any injury suffered during the course of employment. For work injuries covered by the Return to Work Act 2014, the absence counts as allowable only until the worker has received weekly payments for a total of 104 weeks, whether continuous or aggregated. After that, the worker stops accruing service under the scheme while still absent due to injury. This creates a cliff: someone injured for more than two years may find their long service leave entitlement frozen or reduced.

Ordinary weekly pay (regulation 6) defines the base used for calculating levy contributions and benefits. The regulation mandates that certain payments be included: annual leave (but not the loading), sick leave, public holiday pay, rostered day off pay, industry allowance or tool allowance, and workers’ compensation weekly payments (again subject to the 104‑week cap). Excluded items are annual leave loading, overtime, bonuses, site allowance, retirement or redundancy payments (except back‑pay), fares or travel allowances, and special‑rate pay for occasional disabilities (unless paid during a leave period). The exclusion of annual leave loading, bonuses and overtime reduces the levy base compared with gross wages, which slightly lowers the compliance cost for employers but also means the levy does not capture total remuneration. The inclusion of workers’ compensation payments up to 104 weeks means the scheme continues to accrue service for injured workers, but only for the first two years.

Remuneration for services (regulation 9) uses an identical list of inclusions and exclusions for the purpose of section 26(6) of the Act, which deals with the Board’s power to determine remuneration for levy purposes. This ensures consistency between the calculation of ordinary weekly pay and the broader concept of remuneration. It avoids ambiguity but also means the same contentious exclusions (overtime, bonuses, site allowances) apply in both contexts.

Corresponding laws (regulation 5) list the portable long service leave schemes in every other Australian state and territory. This allows a worker who has accrued service under, say, the Queensland Building and Construction Industry (Portable Long Service Leave) Act 1991 to have that service recognised in South Australia, and vice versa. The list creates a national portability framework for construction workers, reducing the incentive to stay in one state merely to preserve leave entitlements. It also imposes a record‑keeping burden on employers who hire workers with interstate service, as they must verify and report that service correctly.

Return periods (regulation 10) divide the financial year into six two‑month periods: July/August, September/October, November/December, January/February, March/April, and May/June. Employers must lodge returns and pay levy for each period. Bi‑monthly returns are more frequent than quarterly or annual reporting, increasing administrative costs. The regulation does not provide for an annual return or a de minimis exemption for small employers.

Penalty for late payment (regulation 11) sets the prescribed rate of interest at 20 per cent per annum and the flat late‑payment amount at $75. That rate is high relative to commercial bank rates, likely intended as a deterrent, but it also means that even a one‑day delay on a small levy payment triggers a $75 fee plus daily interest at 20 per cent. The combination can become punitive relative to the amount owed.

Self‑employed contractors and working directors (regulation 12) allows these persons to make voluntary payments under section 37A of the Act and receive credit for effective service. The regulation prescribes the same bi‑monthly periods as for employer returns, and states that for each period in which a payment is made, the Board must credit the person with the number of days of effective service that would be credited if they were working full‑time as a construction worker. This means payment buys a set benefit regardless of actual hours worked, which may over‑ or under‑credit a person depending on their true workload.

The regulations directly impose obligations on any person who becomes an employer in the South Australian construction industry. That includes natural persons, partnerships (each partner must be named), and bodies corporate (each director must be named). A sole trader hiring even one construction worker must register within one month. The definition of “construction industry” is left to the Act, but the regulations do not exempt small builders, subcontractors who take on a single employee, or owner‑builders who temporarily hire labour. The registration requirement (regulation 7) demands detailed information: name, business name, postal address, registered office (if different), address of business records, date first wages were paid, and number of construction workers employed. This means a person who starts a business must collect and maintain that data from the outset. The penalty for failing to register is $1,000, which is modest but still real for a micro‑business.

Construction workers themselves are affected because the regulations determine which absences still accrue service, which payments are included in ordinary weekly pay, and how interstate service is recognised. Workers who suffer a work injury and exhaust their 104 weeks of weekly payments will see their service stop accruing, even if they remain employed but absent. Workers who receive large overtime or bonuses will see those amounts excluded from the levy base, which reduces their eventual long service leave payout because the benefit is calculated on ordinary weekly pay rather than total earnings.

Self‑employed contractors and working directors who elect to participate under section 37A of the Act are affected by regulation 12. They must decide whether to make voluntary payments each bi‑monthly period. If they do, they are credited with full‑time equivalent service, which may be generous if they work less than full‑time but expensive if they work more and could have received higher credits from a different basis. The regulation does not allow pro‑rata crediting for part‑time work; it is all or nothing per period.

Supervisors who cease to be construction workers but remain in the industry must give notice under section 18 of the Act, and regulation 8 prescribes the content of that notice: full name, address, date they stopped being a construction worker, date they started as a supervisor, and their employer’s name and address. The notice must be verified by statutory declaration, adding a notary cost and administrative step. Failure to give notice may cause loss of service continuity.

The Board itself is affected because it must administer these provisions: accept registrations, process returns, handle supervisor notices, credit self‑employed payments, and impose penalties. The regulations give the Board clear rules but also a fixed penalty structure that limits its discretion. For example, the Board cannot waive the $75 late fee or reduce the 20 per cent interest rate; it must apply them as prescribed.

Finally, the regulations affect any person or entity that deals with the construction industry in multiple states, because the list of corresponding laws enables portability. An employer with workers shifting between SA and Victoria must reconcile both schemes.

Duty to register: Every person who becomes an employer in the construction industry must register with the Board within one month of becoming an employer (regulation 7(1)). The application must be in writing, signed, and set out the prescribed details. Failure is an offence carrying a maximum penalty of $1,000. This duty applies immediately upon hiring the first construction worker, not after a probationary period or a minimum threshold of wages paid. It is a strict liability offence in the sense that no mental element is mentioned; a person who does not register is guilty regardless of ignorance.

Duty to make returns: Employers must lodge returns for each bi‑monthly return period (regulation 10). The Act (section 27) empowers the Board to require returns, and the regulations specify the six periods. The content of the return is likely set by the Board, but the regulations do not prescribe a form. The duty to return is ongoing; an employer who ceases to employ construction workers must presumably notify the Board but still must lodge nil returns for the periods in which no workers were employed, unless the Board otherwise directs.

Duty to pay levy: Coupled with the return duty is the duty to pay the levy (rate set by the Act) on time. Late payment triggers the penalty interest and flat fee under regulation 11.

Duty to give supervisor notice: A person who becomes a supervisor in the construction industry after having been a construction worker must give notice under section 18 of the Act. Regulation 8 prescribes the content and requires verification by statutory declaration. The regulation does not state a time limit for giving that notice; presumably the Act does. Failure may jeopardise the person’s right to count previous service.

Rights of construction workers: Workers have the right to have their service calculated in accordance with the allowable absence rules. If they are absent due to injury, they can accrue service for up to 104 weeks of weekly payments. They can also have their interstate service recognised under corresponding laws. Their ordinary weekly pay for levy and benefit purposes must be calculated using the inclusions and exclusions in regulation 6. Workers who are paid an allowance instead of annual leave or sick leave have a right to have that allowance count as allowable absence, but only up to the caps (20 days for annual leave, 10 days for sick leave). These caps may disadvantage workers in casual arrangements where the allowance replaces multiple entitlements.

Rights of self‑employed contractors and working directors: These persons have a right to opt into the scheme under section 37A of the Act. Regulation 12 gives them a mechanism to pay contributions and receive service credits. The credit is set at the full‑time equivalent level per period for which payment is made. This is a right but also an option; they can choose not to participate. The regulation does not allow partial periods or pro‑rata credits.

Right to be free from double counting: Corresponding laws (regulation 5) ensure that service in another state’s portable long service leave scheme is recognised. Workers are not required to start anew when moving to SA. However, the regulations do not detail how overlapping service periods are handled; presumably the Act defers to inter‑governmental agreements.

Penalties as a constraint on rights: The late‑payment penalty (20 per cent per annum + $75) is a duty imposed on employers, but it indirectly affects workers by ensuring the scheme is funded. If an employer fails to pay, the Board may still credit the worker, but the regulations do not address that.

The regulations create only one express offence: failing to register as an employer within one month (regulation 7(3)). The maximum penalty is $1,000. That is a modest amount for a business but could be a significant burden for a newly‑started sole trader. The offence is not defined as a continuing one; it is committed at the point the month expires. The Board would likely need to bring proceedings in the Magistrates Court, and the penalty is a maximum, not an automatic fine. The regulations do not state whether the Board can issue an infringement notice or must prosecute.

For late payment of levy, the regulations do not create a separate offence; they prescribe the financial consequences under section 29 of the Act. Regulation 11 sets the prescribed rate of interest at 20 per cent per annum and the prescribed amount (a flat late fee) at $75. The interest presumably accrues daily on the overdue amount from the due date until payment. The $75 fee is a one‑off charge, not per day. The interaction is not detailed: if the levy is $200, the fee plus interest can make the total significantly higher. For small employers, this creates a strong incentive to pay on time; for larger employers, the $75 fee is trivial but the 20 per cent interest rate is still above commercial rates.

The regulations do not prescribe enforcement powers for the Board, such as inspection rights, information‑gathering powers, or the ability to recover unpaid levy through debt collection. Those are in the Act. The regulations also do not set penalties for failing to make returns, failing to give supervisor notice, or providing false information. Those would likely be offences under the Act itself.

The combination of a $1,000 maximum penalty for non‑registration and a high late‑payment interest rate suggests the scheme relies heavily on self‑enforcement and financial deterrence rather than punitive fines. However, the lack of continuing offence provisions means that an employer who never registers could only be fined once, even if they employ workers for years without registering. The Board might then use the Act’s broader provisions to recover unpaid levy, but the regulations do not assist.

Enforcement is likely handled by the Board through administrative action, correspondence, and ultimately litigation. The prescribed amounts give the Board clear authority to add interest and fees without further discretion. That reduces litigation risk but also removes flexibility for genuine hardship. An employer who is a few days late due to bank processing delays cannot argue the penalty should be waived; the regulation is mandatory.

The regulations do not mention any power to compromise penalties or enter into payment plans. That may be in the Act or in Board practice, but the text is silent.

Construction Industry Long Service Leave Act 1987 (the Act): These regulations are made under the Act and give effect to many of its sections. Regulation 4 defines “allowable absence” for the purposes of the definition in section 4 of the Act. Regulation 6 provides inclusions and exclusions for ordinary weekly pay under section 4(3)(d). Regulation 5 lists corresponding laws for the definition in section 4. Regulation 8 prescribes the notice under section 18. Regulation 9 defines services and remuneration under section 26(6). Regulation 10 sets return periods under section 27(1). Regulation 11 sets the late‑payment consequences under section 29(1). Regulation 12 prescribes periods and credits under section 37A(4). The regulations do not amend the Act; they fill in gaps. Where the Act is silent, the regulations bind.

Return to Work Act 2014 (SA): The regulations heavily incorporate workers’ compensation concepts. Regulation 4(2) limits allowable absence for work injuries to the first 104 weeks of weekly payments under the Return to Work Act 2014. Regulation 6(a)(vi) includes those weekly payments in ordinary weekly pay, but again only up to 104 weeks. Regulation 9(a)(vi) does the same for remuneration. This means the long service leave scheme tracks the workers’ compensation scheme closely for the first two years, then diverges. After 104 weeks, an injured worker may still be entitled to compensation but will no longer accrue long service leave service and those payments are excluded from the ordinary weekly pay base. The interaction creates a cliff that may surprise workers on long‑term compensation.

Long Service Leave Act 1987 (SA): Regulation 4(1)(d) provides that long service leave under the Long Service Leave Act 1987 is an allowable absence. This ensures that a worker taking long service leave under the general scheme does not break continuous service for the construction industry scheme, and vice versa. The two Acts coexist, but the construction industry scheme is portable and industry‑specific; the general scheme is not.

Corresponding laws in other states and territories: Regulation 5 lists nine schemes. This enables portability: a worker who moves from Victoria to South Australia can have their Victorian service counted as continuous service under the SA Act, provided the Victorian scheme is a “corresponding law”. The regulations do not specify the mechanism for transferring records; that is likely covered by inter‑government agreements or the Act. The list is comprehensive and includes all states and the Northern Territory, but not the ACT’s general long service leave scheme; only the ACT’s portable long service leave scheme for construction is listed. It also lists Tasmania’s construction scheme, the Northern Territory’s scheme, and so on.

Industrial awards and enterprise agreements: The regulations do not directly interact with awards or agreements, but they affect the levy base. For example, a site allowance is excluded from ordinary weekly pay and remuneration, regardless of whether it is paid under an award. This may reduce the levy payable but also reduce benefits for workers who receive substantial site allowances. The exclusion of overtime also means that the scheme does not fully reflect total earnings, which may create an incentive for employers to structure pay as overtime or bonuses rather than base wages to reduce levy. However, the Act may have anti‑avoidance provisions not mentioned in the regulations.

Tax law: The regulations do not refer to taxation, but the payments required (levy, late fees) are likely deductible as business expenses. The inclusion of certain payments in ordinary weekly pay affects the quantum of the levy, which is a cost of employment.

According to the legislative history printed at the end of the regulations, these are the principal regulations, numbered 2018 No. 205, published in the South Australian Government Gazette on 30 August 2018 at page 3258. They came into operation on that same day, as per regulation 2. The only amendment noted is that they revoked the Construction Industry Long Service Leave Regulations 2003 (Schedule 1). There is no record of any subsequent amendments to these 2018 regulations in the source document. It is possible that amendments have been made since 2018, but the source text provided does not include them. The reader should check the current version on the South Australian legislation website. The revocation of the 2003 regulations means that any transitional provisions or older definitions no longer apply. Businesses that were accustomed to the 2003 version had to adjust to the 2018 version from 30 August 2018. The source does not list any transitional savings or transitional provisions; the new regulations applied immediately. This abrupt replacement could have caused compliance difficulties if the new regulations changed, for example, the list of allowable absences or the ordinary weekly pay inclusions, but the source does not detail those changes. A careful compliance officer would need to compare the two sets of regulations line by line to identify differences. The regulations do not contain a note explaining why they were remade; it may have been a routine periodic review.

The regulations themselves do not cite any litigation. The source text contains no references to court cases. That does not mean no litigation has occurred under the Act or these regulations; it means the text does not record it. Likely disputes would involve the meaning of “allowable absence” (e.g., whether a particular injury qualifies as “suffered during the course of employment”), the calculation of ordinary weekly pay (e.g., whether a payment is in the nature of a bonus or a tool allowance), or the application of late‑payment penalties (e.g., whether the Board correctly calculated interest). The regulations provide clear lists, which reduce interpretive litigation, but boundary disputes are inevitable. For example, what constitutes a “special rate paid to the worker on an irregular basis to compensate for occasional disabilities” (regulation 6(b)(vii) and 9(b)(vii))? That language invites argument. Similarly, the cap of 20 working days per year for a paid‑annual‑leave allowance might be challenged if an allowance covers a longer period. The requirement that a supervisor’s notice be verified by statutory declaration (regulation 8(2)) could lead to disputes if the declaration is inaccurate. Litigation could also arise from the interaction with the Return to Work Act 2014: whether a worker has exhausted the 104‑week cap might be contested. Without specific cases in the source, we cannot say more. It is plausible that the Board has internal dispute resolution mechanisms under the Act before matters reach court. The regulations do not set out any appeals process; that would be in the Act.

Several provisions may catch employers or workers off guard.

First, the 104‑week cap on workers’ compensation as allowable absence (regulation 4(2)). A worker who is injured and receives weekly payments for two years will stop accruing service under the scheme from that point, even if they remain employed and incapacitated. Many workers or their advisers might assume the absence still counts. This could significantly reduce a long service leave payout for someone seriously injured. Employers need to track the aggregate period of weekly payments and notify the Board when the cap is reached.

Second, the caps on allowances in lieu of leave (regulation 4(1)(b)(ii) and (c)(ii)). If a worker is paid an allowance instead of annual leave, only up to 20 working days per year counts as allowable absence. The same for sick leave allowance at 10 days. If the worker’s allowance covers more days (e.g., a casual loading that compensates for all leave), only the capped portion preserves service. This may surprise workers in casual or contract roles who assume their allowance fully protects their continuity.

Third, the full‑time equivalent credit for self‑employed contractors and working directors (regulation 12(2)). A person who works only two days a week but pays the levy for a bi‑monthly period still receives credit for the number of days a full‑time worker would accrue. That appears generous, but it also means the levy payment must be based on full‑time wages, not actual earnings. If the contractor pays less than the full‑time levy amount, they might receive no credit or only partial credit. The regulation does not specify how the Board calculates the levy amount for these persons; it only says the credit equals what a full‑time worker would get. The risk is that a self‑employed person pays the levy based on their actual lower earnings but then receives less credit than expected, or the Board demands a higher payment to match the full‑time credit. The regulation is ambiguous.

Fourth, the exclusion of site allowances, bonuses, and overtime from ordinary weekly pay and remuneration. Employers may take advantage of this to reduce their levy liability by structuring pay as bonuses or site allowances. However, this also reduces the long service leave benefit for workers, who may not realise that their leave payout will not reflect those payments. It creates a moral hazard: employers have an incentive to reclassify wages as excluded items, but the Act may have general anti‑avoidance provisions not in the regulations.

Fifth, the late‑payment penalty structure (regulation 11): 20 per cent per annum interest plus a flat $75 fee. For a small amount overdue, the $75 fee can be larger than the interest. For example, on a $100 levy that is 30 days late, the interest would be about $1.64, but the flat fee is $75, making the total penalty 76.64 per cent of the levy amount. This is highly punitive for small businesses. The regulation does not allow for waiving or reducing the fee.

Sixth, the registration deadline is one month from becoming an employer (regulation 7(1)). A person who hires a worker on, say, 1 March has until 1 April to register. If they miss that date by even one day, they commit an offence and may be liable for the $1,000 penalty, even if they have not yet received any payment from the client.

Seventh, the requirement for supervisor notices to be verified by statutory declaration (regulation 8(2)). This adds a step and cost (a lawyer or Justice of the Peace must witness the declaration). A person who merely sends a letter to the Board without a declaration may fail to give effective notice and lose continuity of service.

Eighth, the return periods are bi‑monthly (six per year). An employer who forgets or delays a return for just one period may face the late‑payment penalties even if the levy is paid on time. The regulations do not separate the duty to return from the duty to pay; both are likely required.

To comply with these regulations, an employer in the South Australian construction industry should take the following steps.

Step 1: Register within one month. As soon as you hire your first construction worker, prepare a written application that includes: your full name (and partners’ or directors’ names), any business name, your postal address, the address of your registered office (if a company) if different, the address where business records are kept, the date you first paid wages in SA to a construction worker, and the number of construction workers employed. Sign the application and post or deliver it to the Board. Keep a copy. Failure to register is an offence with a maximum penalty of $1,000.

Step 2: Maintain accurate payroll records. You need to track all payments to construction workers and correctly classify them under regulation 6. For each worker, separate out: annual leave (but not loading), sick leave, public holiday pay, rostered day off pay, industry allowance or tool allowance, and workers’ compensation weekly payments (up to 104 weeks). These must be included in ordinary weekly pay. Exclude: annual leave loading, overtime, bonuses, site allowance, retirement/redundancy payments (except back‑pay), fares/travel allowances, and special‑rate pay for occasional disabilities (unless paid during leave). Your payroll system must be able to generate these amounts.

Step 3: Know which absences are allowable. Under regulation 4, you must record allowable absences for each worker: public holidays, paid annual leave (or allowance up to 20 days per year), paid sick leave (or allowance up to 10 days per year), long service leave, and work injuries (but only the first 104 weeks of weekly payments). Workers on workers’ compensation beyond 104 weeks stop accruing service. Make sure your HR system flags when a worker reaches that cap.

Step 4: Lodge returns every two months. The return periods are: July/August, September/October, November/December, January/February, March/April, May/June. For each period, prepare a return showing the wages and levy due (the Act sets the levy rate). The Board may provide a form. Lodge the return and pay the levy by the due date. Do not rely on the Board sending a reminder; the duty is on you.

Step 5: Pay on time to avoid penalties. If you are late, regulation 11 imposes 20 per cent per annum interest on the overdue amount plus a flat $75 fee. The fee is per overdue period, not per day. Pay even a day late and you owe $75 plus daily interest. Set up direct debit if possible.

Step 6: If you become a supervisor after being a construction worker, file a notice under section 18. Use a written notice that sets out your full name and address, the date you ceased as a construction worker, the date you started as a supervisor, and your new employer’s name and address. Verify the notice with a statutory declaration. Post or deliver to the Board.

Step 7: If you are a self‑employed contractor or working director and wish to participate, make payments under section 37A. Decide if you want coverage. If yes, make a payment for each bi‑monthly period. The Board will credit you with the number of days of effective service that a full‑time worker would earn for that period. Keep records of payments and any correspondence with the Board about your election.

Step 8: Monitor interstate workers. If you hire a worker who has previously worked in another state under a corresponding law listed in regulation 5, obtain evidence of their service in that state (e.g., a certificate from that state’s board). Report the service correctly in your SA returns so the worker does not lose continuity.

Step 9: Review any allowances in lieu of leave. If you pay a worker an allowance instead of annual leave or sick leave, remember that only 20 days of annual leave allowance and 10 days of sick leave allowance per year count as allowable absence. If the allowance covers more, the extra days do not preserve service. Advise workers accordingly.

Step 10: Keep records for audit. The Board may request records to verify registration, returns, and payments. Maintain all payroll records, statutory declarations, copies of returns, and levy payment receipts for at least the period required by the Act (likely several years). Failure to produce records on demand may lead to penalties under the Act, though the regulations do not specify.