A lack of clarity around changes to the Living Away from Home Allowance has left employers with a tight deadline for ensuring compliance with the new legislation, say top recruitment executives.

ManpowerGroup Australia and New Zealand managing director Lincoln Crawley said uncertainty around the changes, which come into effect on July 1, had made it difficult for the company and its clients to adequately prepare.

Had there been "full and frank disclosure" when the changes were initially announced in November, he said, employers would have had a "reasonable" seven-month period to prepare.

However, the amendments were not well thought out, which led to "significant changes" to the original proposal outlined in this month's Federal Budget.

"It's unrealistic and unreasonable to think that a business is going to be able to [comply with] a law that'll be passed a month or less before it's actually implemented," Crawley told Shortlist.

"We can't hand-on-heart tell employees and employers exactly what's going to be passed into the law because in the current political environment it may change," he added.

Projects will be shelved

Crawley said the new 12-month limit on receiving the allowance was short-sighted.

"This will force organisations to really rethink whether the projects and the tasks that they're bringing people in for, given the upward pressure on salaries, are viable," he said.

"From the anecdotal feedback we've had from many employers, there will be many things that are put on hold or scrapped because of this."

Finite IT general manager Duncan Thomson said the timeframe was concerning given the scope of the changes required.

"It appears to be coming very quickly as a major package of change."

Particularly for the IT industry, which already struggled to compete with high wages in other countries, Thomson said the restrictions on LAFHA would be another impediment to bringing in international specialists, who were instrumental in rolling out new technologies in Australia.

Salary pressure set to rise

Peoplebank CEO Peter Acheson agreed the changes would put upward pressure on salaries, not just for foreign staff but local candidates.

"Even just the reduction in LAFHA back to 12 months is going to put some pressure on salaries," he said.

"Those employees who've moved state are probably going to go to their employer and say 'I'm no longer able to receive LAFHA - what can be done for my salary to compensate for that loss?'"

"Ultimately the employer will then end up having to pay for it, in some way, shape or form."

He said Peoplebank was currently waiting for the legislation to be "communicated and clearly understood" before putting in place changes within its business.