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Understanding long service leave entitlements

Understanding long service leave entitlements (Last Updated On: July 28, 2015)

Long service leave originates from when the British first set up colonies in Australia. It was introduced to allow employees working in the colonies sufficient time to visit the United Kingdom. Over time, other rationales have come to underpin the entitlement, including a reward for long and faithful service and to reduce employee turnover.

Although long service leave is protected as a National Employment Standard, there is no uniform national long service leave entitlement. Instead entitlements vary from state to state and between occupations, making it difficult for employers to understand their obligations.

A national standard

While the establishment of a uniform ‘national standard’ for long service leave is appealing, it does raise some concerns. For example, any standardisation may result in an improvement in long service leave entitlements for some employees. For example, South Australia has more beneficial long service leave laws than other states (three months long service leave after 10 years’ continuous service). If this standard was adopted across Australia, there would be a significant increase in long service leave entitlement and a significant increase in liability for employers. However, employee associations will object to the adoption of a less favourable standard, which would reduce some employees’ existing entitlements.

National standardisation will continue to be subject to a great deal of debate.

Current position

In the meantime, employers are left to grapple with a complex system. Employers should start by ascertaining which instrument sets their employees’ entitlements.

  • Is there an operative collective agreement, certified agreement, enterprise agreement or other type of agreement which sets out long service leave entitlements?
  • If not, is the employee covered by a pre-modern award which sets long service leave entitlements?
  • If not, the employee’s entitlements will be covered by the relevant state or territory legislation, which differ significantly.

These disparate entitlements to long service leave have significant implications.

  • Depending on the applicable legislation, award or industrial instrument, the entitlement to long service leave arises after a period of continuous service ranging from seven to fifteen years.
  • The entitlements may depend on the employee’s employment status.  For example, in some states/territories casual employees may be entitled to long service leave.
  • Entitlements on termination of employment and other matters, such as cashing out the long service leave, differ between state and territories.
  • Some states and territories have also developed portable long service leave schemes in certain industries, in particular in construction and cleaning services (which allows employees to claim entitlements based on service with different employers, funded by levies on industry employers).
  • Different rules apply in relation to employee rates of pay during long service leave (although this is generally based on ordinary rates of pay).

The differing entitlements and rules for long service leave throughout Australia and in different occupations creates confusion, in particular for businesses operating across the various states. It is important that businesses understand the different standards may apply within their workforce.

On the upside, Employsure is here to help. Please contact Employsure if you have any questions or concerns about long service leave entitlements.

By Cari-Dee Le – Documentation Consultant

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