For most employees in Australia, if they have been working for the same employer for an extended period of time, they are entitled to a period of paid leave called long service leave. This entitlement is generally different for each state and territory. Below is information on long service leave in New South Wales.
Long Service Leave Entitlements in NSW
Under the National Employment Standards (NES) contained in the Fair Work Act 2009 employees who have worked continuously in a business for a long period of time may be entitled to long service leave. This may be as a result of their applicable pre-modern award or workplace agreement, though generally the entitlement to long service leave is derived from the relevant state or territory long service leave legislation.
However, the State and Territory Long Service Leave laws won’t apply to national system employees where there are long service leave entitlements in a federal pre-modern award that would have applied to an employee before 1 January 2010. In this case, the entitlements in the pre-modern award will apply. As this is a complex area, you should seek professional advice regarding your employees’ long service leave entitlements.
Long Service Leave Act 1955
Employees in New South Wales not covered by another long service leave scheme are covered by the Long Service Leave Act 1955 (the Act).
The legislation sets out long service leave entitlements including:
How long an employee has to have worked continuously to get long service leave;
How much long service leave the employee gets once they have worked the initial period to qualify; and
How and when the leave is paid.
Under the Act, employees are entitled to two months (8.6667 weeks) of long service leave upon the completion of at least 10 years of continuous service with their employer. On top of this, for each additional five years of service after the initial 10, employees are entitled to a further month of long service leave. This month is defined to be just over four weeks in length (or more specifically, four and a third weeks).
An employee may be entitled to pro-rata long service leave if the employment ends earlier, depending on the rules in the long service leave scheme, and the specific circumstances.
Pro-Rata Leave
An employee who has completed at least 5 years of continuous service, but less than 10 years, will be entitled to pro-rata long service leave in certain circumstances (unless terminated for serious misconduct). If the employment ends before 5 years there is no entitlement to long service leave.
Special conditions may apply to workers in the building and construction industry and employees of cleaning contractors.
In addition, where an employee resigns after five years’ service on account of illness, incapacity or domestic or other pressing necessity, or the employee dies, they will also be entitled to pro-rata long service leave.
Long Service Leave Eligibility
Full time, part time, and casual employees are entitled to long service leave, provided they have completed the required amount of continuous service.
Service will be considered to be continuous despite employer authorised absences, due to illness or injury, for example. However, some authorised absences may not count for leave accrual, such as parental leave. BrightHR can help you keep track of your employees’ leave entitlements by monitoring absences and shifts schedules, as well as working hours as they clock in and out with Blip. You can generate a report that will show the number of shifts and hours worked, breaks and their duration and the total number of hours worked, storing all this data securely in the cloud.
Portable Long Service Leave
Some Australian States and Territories have legislation to provide employees in the security, community services, building and construction, black coal mining, and contract cleaning industries with access to portable long service leave.
In NSW, portable long service leave is available for employees (including apprentices, full-time, trainees and casuals) who work in the building and construction and contract cleaning industries. These employees are covered by separate legislation to the Long Service Leave Act 1955. Employers in these industries must register with the Long Service Leave Corporation (the relevant authority).
Paying Long Service Leave
When the employee takes long service leave, an employer must pay long service leave in any way and at any time that is mutually agreed before the start of the leave. If there is no agreement the employer must pay the employee either in full when the employee starts the long service leave; or pay the employee at the same time and in the same manner as if the employee had not taken the leave.
Full-Time and Part-Time Employees
Long service leave is paid out at the ordinary rate of pay of the employee for their normal weekly hours.
Ordinary rate of pay means the greater of:
the amount of the ordinary remuneration as at the time they take the leave; or
the average weekly remuneration they earned in the previous 5 years.
This may include bonuses and incentive payments but not penalty and overtime rates, and expense-related allowances.
Casual Employees
Where the employee doesn’t have a fixed weekly amount of pay (e.g commission- based employees) or where the employee does not have a fixed number of ordinary hours per week (e.g a casual employee), their ordinary rate of pay is deemed to the greater of:
The average weekly earnings over the previous 12 months; or
Their average weekly earnings over the previous 5 years.
Again, penalty rates, overtime payments and expense-related allowances are not included, but bonuses and incentive payments may be depending on the circumstances.
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Long Service Leave on Termination
Once an employee has been employed continuously for at least 10 years, and has become entitled to long service leave, if their employment subsequently ends they must be paid out any long service leave owing.
This will apply if they resign, or they are terminated for any reason, including if they are made redundant, and even in the case of dismissal for serious misconduct.
If the employee has been employed for at least 5 years but less than 10 they may be entitled to be paid out (pro-rata) long service leave depending on the circumstances of the termination (see above). However, they will not be entitled to pro-rata long service leave if terminated for serious misconduct.
The Long Service Leave Act 1955 provides that employers must keep records regarding long service leave for a period of at least 6 years after the employee’s employment ends. You can manage and keep track of employee rosters, timesheets, leave and absenteeism with BrightHR. You can generate and print reports, and then store wage and time records and related documents securely in the cloud.
For more information on long service leave please call BrightHR for free initial advice on 1300 651 415.
The questions below have been answered according to the NSW state long service leave laws. Please note that these laws won’t apply to national system employees employed before 01 January 2010 where there are long service leave entitlements in a federal pre-modern award that would have covered an employer and their employees at that time, in which case those entitlements in the pre-modern award will apply. As this is a complex area, if your business existed before 01 January 2010 you should seek professional advice as to your employees’ long service leave entitlements.
Frequently Asked Questions
How Long Is Long Service Leave under NSW legislation?
Employees are entitled to two months (8.6667 weeks) of long service leave upon the completion of at least 10 years of continuous service with their employer. On top of this, for each additional five years of service after the initial 10, employees are entitled to a further month or four and a third weeks (4.3333 weeks).
When Is An Employee Entitled To Long Service Leave?
An employee covered by the NSW long service leave scheme is entitled to long service leave upon the completion of at least 10 years of continuous service with their employer and every five years of completed service after that.
Does Maternity Leave Affect Long Service Leave?
Parental or Maternity leave does not affect the continuity of the employee’s employment within the business, but it does not count towards calculating the length of service for purposes of long service leave, which means that if the employee was on maternity leave for 1 year, that year is not included in the 10 years of service.
Are Employees Entitled To Long Service Leave After 7 Years?
Under the NSW long service leave scheme employees may be entitled to pro-rata long service leave after 5 years of continuous services in certain circumstances, i.e. if the employee:
- Resigns on account of illness, incapacity, domestic or other pressing necessity;
- Is dismissed for any reason except serious misconduct, e.g. is made redundant; or
- Dies
Can An Employee Access Long Service Leave Early?
Yes, long service leave can also be taken in advance as long as the employer and employee both agree. Long service leave taken in advance must not be less than one month.
How Does An Employee Claim Long Service Leave?
The National Employment Standards (NES) contained in the Fair Work Act 2009 provide that long-term employees may be entitled to long service leave i.e. a number of weeks of paid leave. Long-term employees (and even casual employees) under the NSW long service leave scheme may be entitled to long service leave as further defined in the Long Service Leave Act 1955.
When the employee becomes entitled to long service leave they take it as soon as reasonably practicable having regard to the needs of the Company, or you may agree that the long service leave be postponed. BrightHR has a function that allows employees to submit leave requests through the mobile app for you to review, accept and decline where appropriate.
How Is Long Service Leave Calculated?
Under the New South Wales long service leave scheme, an employee gets 2 months long service leave (8.6667 weeks) after 10 years continuous service. For each additional five years of service after the initial 10, employees are entitled to a further month (4.3333 weeks) of long service leave. Unauthorised absences and periods of parental leave are deducted from the period of continuous service.
Is Long Service Leave Payable On Redundancy?
Yes, provided the employee has been employed continuously in the business for at least 5 years.
Is Long Service Leave Payout On Resignation?
Yes, provided the employee has been employed continuously in the business for at least 5 years AND the resignation is because of of illness, incapacity, domestic or other pressing necessity.
Can I Force An Employee To Take Long Service Leave?
If the employer and employee cannot agree on a time to take the leave, an employer can direct an employee to take long service leave by giving the employee at least 1 months’ notice.
Do Casual Employees Get Long Service Leave?
Yes, Causal employees are entitled to paid (pro-rata) long service leave in NSW provided they have been employed continuously in the business for at least 5 years and meet certain conditions.