Preparing for the requirements of the New Portable Long Service Leave Scheme in NSW’s Community Services Sector
From 1 July 2025, community service organisations across New South Wales are covered by the new Community Services Industry Portable Long Service Leave Scheme (CSI PLSL).
This represents a major shift in how long service leave (LSL) is funded and administered across the sector. Employers will need to prepare for new compliance obligations, quarterly levy payments, and operational changes to HR and accounting systems. Early preparation will be key to managing the transition smoothly.
What Employers Need to Know About the New Scheme
The CSI PLSL scheme is designed to provide LSL benefits to community service workers even if they move between employers in the sector.
Key features include:
- Accrual entitlement: Workers accrue 6 weeks of leave after 7 years of recognised service within the industry (not tied to one employer).
- Start date: The scheme began on 1 July 2025. Service before this date does not count towards portable LSL.
- Covered workers: Applies to full-time, part-time and casual employees in eligible community service organisations.
- Breaks in service: Employees can have breaks of up to 4 years away from the community services industry without losing their accrued entitlements under the scheme.
- Special circumstances: Breaks due to illness, injury, pregnancy, caregiving, community work, or domestic/family violence may be accepted to extend the 4-year gap, but workers must notify the Long Service Corporation (LSC).
- Foundation worker bonus: Workers reported in the first two service returns (1 July to 31 December 2025) will receive a bonus credit of 365 days of service, reducing their qualifying period to 6 years.
How It Interacts with Traditional Long Service Leave
The new scheme will operate alongside the existing system under the Long Service Leave Act 1955 (NSW):
- Separate entitlement: Portable LSL is separate from traditional LSL.
- Dual coverage: Workers employed before 1 July 2025 may qualify for both schemes, but there is no double-dipping, once an entitlement is paid out, that service is no longer counted for the other scheme.
- Transition period: Any traditional LSL paid out after 1 July 2025 can be partially reimbursed from the portable scheme for the post-July 2025 portion, ensuring employers are not funding the same period twice.
Important: Employers will still need to manage and fund traditional LSL for pre-1 July 2025 service and for any staff not covered under the new scheme.
Employer Obligations Under the New Scheme
Employers who fall within the defined community services industry will have new responsibilities from 1 July 2025:
- Registration: Register with the Long Service Corporation (LSC) as an employer under the scheme.
- Quarterly returns: Lodge service and wage data to the LSC and pay the levy. The first return (covering 1 July 2025 – 31 March 2026) is due by April 2026, after which returns will be due quarterly.
- Levy payments: Pay a levy (1.7%) on gross ordinary wages/remuneration of eligible workers with each return.
- Record keeping: Maintain accurate employee service and wage records to support these returns.
- Leave administration: When an employee becomes eligible (after 7 years of recognised industry service), the LSC will fund their leave payments, not the current employer.
Over time, employers may see a gradual reduction in long service leave liabilities as eligible workers transition into the CSI PLSL. However, they may still need to carry liabilities for pre-1 July 2025 service and for employees not covered by the scheme, while funding new entitlements through the levy.
Determining If Your Organisation Is Covered
The scheme applies to organisations that provide any of the 31 types of community services listed under Schedule 1 of the Community Services Sector (Portable Long Service Leave) Act 2024. Eligibility for registering, paying the levy, and accessing portable LSL depends on whether your organisation delivers work that falls into one or more of these service types. Coverage depends on the type of work performed. Not all employees of a community services organisation will necessarily fall within the scheme.
Here are three example categories from that Schedule:
- Homelessness support services – including shelters, transitional housing, tenancy support, advice, and programs to secure stable accommodation.
- Disability supports and services – assistance for individuals with disabilities, including daily living, employment, independent living programs and National Disability Insurance Scheme (NDIS)-related services.
- Youth support services – programs for young people, such as mental health, counselling, education, employment support, social activities and interventions for at-risk youth.
You can visit the Long Service Corporation website to see more examples of the types of community services covered by this scheme. However, these descriptions are not a complete list of all activities that may be included in the scheme.
View the full list of community service descriptions →
Practical Steps for Employers to Take Now
The CSI PLSL will change how LSL is managed and funded across NSW’s community services sector. Employers should start preparing the following:
- Assess coverage – Review your services against the LSC’s “Descriptions of Community Services” to confirm whether your organisation is covered.
- Identify eligible staff – List employees who will fall under the scheme and split their service between pre and post-1 July 2025 for correct accrual tracking.
- Budget for the levy – Build the 1.7% levy on ordinary wages into FY25–26 budgets, cash flow forecasts, pricing models, and funding agreements.
- Review balance sheet treatment – Plan how to adjust existing LSL provisions for covered staff and seek accounting advice on derecognition timing as liabilities are transitioned off the balance sheet.
- Update systems and policies – Ensure payroll/HR systems can capture data for quarterly returns, and update employment contracts, leave policies, and enterprise agreements to reflect portable LSL obligations.
- Prepare for the first lodgement – Be ready to submit your first service and levy return (for 1 July 2025 – 31 March 2026) by April 2026, then quarterly thereafter.
- Communicate with staff – Explain how the scheme works, how it differs from traditional LSL, and reassure staff that existing entitlements remain protected.
- Plan for workforce impacts – Expect more staff mobility across the sector. Strengthen retention strategies while also leveraging opportunities to attract experienced workers.
By addressing these areas early, employers can minimise disruption and ensure a smooth transition when the scheme takes effect.
Final Thoughts
The introduction of the CSI PLSL marks a major shift for the NSW community services sector. It aims to make the sector more attractive and stable for workers, but it also brings new compliance obligations, cash flow implications and operational changes for employers.
By preparing early, community service organisations can manage the transition smoothly and avoid compliance issues down the track.
Please reach out to your Walker Wayland contact for assistance.
Sources
- Community service work covered by the scheme – Community Services Industry
- Who is covered by the scheme – Community Services Industry
- Community Services Sector (Portable Long Service Leave) Act 2024 No 39 – NSW Legislation
- Manage employer service returns – Community Services Industry
- Employer frequently asked questions – Community Services Industry
- Your long service leave – Community Services Industry
- Implementation-of-the-new-CSI-portable-long-service-leave-scheme.pdf
