You may have employees working for your business that have worked with you for a long period of time. Under the National Employment Standards (NES) contained in the Fair Work Act 2009 these employees may be entitled to long service leave as a result of their applicable pre-modern award or enterprise agreement, though generally this entitlement is derived from the relevant State or Territory long service leave legislation.
However, the State and Territory 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 a person employed before 1 January 2010 had they been employed at that time, in which case those entitlements in the pre-modern award will apply. As this is a complex area, you should seek professional advice as to your employees’ long service leave entitlements.
These entitlements revolve around how long an employee has to be working to get long service leave (e.g. after 7 years) and how much leave the employee gets.
Under most State and Territory long service leave schemes, long-term casual employees are eligible for long service leave.
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What is Long Service Leave?
For most employees in Australia, if they have been working for the same employer for an extended period of time, they are entitled to long service leave. But the entitlement is different depending on the source of the employee’s long service leave entitlement. If the employee’s long service leave entitlement is not preserved or provided under the Fair Work Act 2009, which State or Territory law applies will depend on where the employee works at the time they take the leave or their employment ends, even if the employer’s registered or head office is located in another State or Territory.
There are two key aspects to each jurisdiction’s definition of long service leave. They are:
How long an employee has to work to qualify
How much leave the employee receives and the appropriate method of determining payment for that leave
Payment
Long service leave entitles employees to payment during their term of leave, but how much an employee is entitled to be paid during long service leave is dependent on the long service leave scheme that applies to them. In most cases, the employee’s ordinary pay rate continues during a long service leave period, and this includes annual leave entitlements.
It is important to note that the ordinary pay rate is usually the employee’s base pay rate for their usual hours of work and does not include:
Pay for long service leave is usually paid out at the employee’s normal weekly hours at the same rate of pay (i.e. what they would have worked if they hadn’t been on leave), generally without any additional benefits and payments, though this depends on the long service leave scheme. If there is no ‘ordinary’ rate of pay, often the pay entitlement during long service leave is calculated in different ways which are compared and the greater amount will apply:
The amount of the ordinary remuneration as at the time the employee takes the leave; compared to
The average weekly remuneration the employee earned in any number of preceding years.
Sometimes an employee does not have a fixed weekly amount of pay and/or hours, for instance if the employee is paid on a commission basis or if the employee is casual. In these cases, long service leave payment is determined by whichever methods prescribed in the long service leave scheme, and the method that provides the greater pay rate will apply. Examples include:
The average weekly earnings over the previous 12 months;
Their average weekly earnings over the previous specified number of years;
The average weekly earnings over their entire period of employment.
It is also important to remember that any unused long service leave has to be paid out at the end of employment and usually it cannot be cashed out while the employee is still working for the business unless the long service leave scheme permits it.
How Do You Calculate Long Service Leave?
Calculating long service leave can differ depending on the state or territory, and the relevant circumstances. You need to refer to the relevant Act that governs the state or territory where the employee is employed.
For example, in New South Wales an employee gets 2 months long service leave (8.6667 weeks) after 10 years of 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.
Qualifying For Long Service Leave
For an employee to qualify for long service leave, they need to have been in continuous employment with the same employer unless a portable long service leave scheme applies. That does not mean to say that they need to have been working in the same position though. Even if the employee’s duties, responsibilities, pay or position have changed over the qualifying period and provided they have not taken large quantities of unapproved unpaid leave within that period, they are still eligible for long service leave.
The below may still count as continuous service under some schemes:
If the employee is transferred between companies within the same group;
If the business is sold and the employee continues to work in the business for the new owner.
The qualifying period for the long service leave entitlement differs depending on the long service leave scheme. When employment ends before an employee has worked the total number of years needed to get the full long service leave entitlement, they can sometimes get paid out part of their long service leave. This is known as pro-rata long service leave on termination.
Whether an employee gets paid out pro-rata long service leave when their employment ends depends on the long service scheme that covers them. Generally, employees will get pro-rata leave after a certain amount of time if they resign as a result of illness, incapacity, retirement, domestic or other pressing necessity, or the employee dies, but the time and reasons differ in each long service leave scheme. There is no pro-rata leave in Victoria.
State And Territory Legislation
As mentioned previously, unless another long service leave scheme applies, the entitlement to long service leave is mostly derived from State or Territory legislation, as most Modern Awards do not contain an entitlement to long service leave. Below are summaries for each State and Territory, however, this information should be used as a guide only. If you are unsure, please call Employsure for free initial advice.
New South Wales
Legislation
Employees in New South Wales who are not covered by pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are covered by the Long Service Leave Act 1955 (the Act).
Entitlements
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).
(NOTE: The New South Wales Government had temporarily amended the Act until 31 March 2022 to allow for greater flexibility during the COVID-19 pandemic. For more information, visit the NSW State Government website.)
Full time, part time, and casual employees are entitled to long service leave, provided they have completed the required amount of continuous service.
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, where an employee resigns on account of illness, incapacity or domestic or other pressing necessity or dies, but not if they were terminated for serious misconduct.
Long service leave cannot be cashed out under the New South Wales Act.
Victoria
Legislation
Employees in Victoria who are not covered by a pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are mostly covered by the Long Service Leave Act 2018 (the Act).
The Act does not apply to employees who are covered by other Victorian legislation that includes long service leave entitlements, e.g. the Construction Industry Long Service Leave Act 1997 which allows for portable long service leave (see below) administered by CoINVEST for workers in the construction industry.
Entitlements
Under the Act, employees are entitled to long service leave after a minimum of 7 years’ continuous service with their employer. An employee is entitled to an amount of long service leave on ordinary pay equal to 1/60th of the period of continuous employment, or approximately 6.1 weeks after 7 years.
Full-time, part-time, casual and seasonal employees are entitled to long service leave, provided they have completed the required amount of continuous service.
There is no pro-rata leave or cashing out of leave under the Act.
Queensland
Legislation
Employees in Queensland who are not covered by a pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are mostly covered by the Industrial Relations Act 1999 (the Act).
Portable long service leave is available for employees (including apprentices, full-time, trainees and casuals) who work in the Building and construction industry, Contract cleaning industry, and most recently the Community Service industry (commencing 1 January 2021).
Employers with employees covered by the portable long service leave scheme must register with QLeave (the relevant authority) and advise when an employee starts and ends their employment with the business.
Entitlements
The long service leave entitlement in Queensland is just over eight weeks (or more specifically, eight and two-third weeks) after a period of 10 years of continuous employment. Beyond ten years of continuous service, employees are entitled to an additional 4.333 weeks’ long service leave for each additional five years of continuous service.
Full-time, part-time, and some casual employees, as well as seasonal employees in specific industries, are entitled to long service leave provided, they have completed the required amount of continuous service.
An employee who has completed at least 7 years of continuous service, but less than 10 years, will only be entitled to pro-rata long service leave on termination under certain circumstances including where an employee resigns on account of illness, incapacity or domestic or other pressing necessity, or dies, or the employer dismisses the employee for a reason other than the employee’s conduct, capacity or performance or unfairly dismisses the employee.
If cashing out is permitted under an award or agreement that covers an employees’ employment, an employee may make an agreement with their employer to cash out all or part of their accrued long service leave entitlements. Any such agreement must be in writing and signed by the employee and the employer.
In the absence of such a provision, an application on the grounds of compassionate or financial hardship can be made to the Queensland Industrial Relations Commission.
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Australian Capital Territory
Legislation
Employees in the Australian Capital Territory who are not covered by a pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are mostly covered by the Long Service Leave Act 1976 (the Act). Please note that this Act does not apply to Public Sector employees or employees covered by the Long Service Leave (Portable Schemes) Act 2009.
Entitlements
Under the Act, employees are entitled to just over six weeks of leave upon completion of at least seven years of continuous service. For each subsequent year of continuous service, employees accrue a further one fifth of a month of long service leave. This means that long service leave is available on a year-to-year basis following the initial 7 year period.
Full-time, part-time, and casual employees are entitled to long service leave, provided they have completed the required amount of continuous service.
An employee who has completed at least 5 years of continuous service, but less than 7 years, will be entitled to pro-rata long service leave if they resign because of illness or incapacity or a domestic or other pressing necessity; or upon or after attaining the minimum retiring age; or if they die or are terminated by the employer for reasons other than serious and wilful misconduct.
Long Service Leave must be taken, and cannot be cashed out.
Western Australia
Legislation
Employees in Western Australia are mostly covered by the Long Service Leave Act 1958 (the Act). It is important to note that the Act does not apply to employees in the building and construction industry; or to National System employees who have long service entitlements in a federal pre-modern award that would have applied to an employee before 1 January 2010 had they been employed at that time; or, in some circumstances, to employees covered by a federal registered agreement. An award, industrial agreement, contract or a State, Territory or Commonwealth statute may provide for a more generous entitlement than the Act or apply to the exclusion of the Act.
Entitlements
Under the Act, employees are entitled to over eight weeks (specifically eight and two-thirds) of long service leave after the completion of at least 10 years of continuous employment with their employer. On top of this, for each additional five years of continuous employment following the initial 10 years, employees are entitled to a further four and one-third weeks of long service leave.
Full-time, part-time, and casual employees are entitled to long service leave, provided they have completed the required amount of continuous service.
An employee is entitled to pro-rata long service leave when they work at least 7 years but less than 10 and the employment is terminated by death; or for any reason other than serious misconduct.
In some circumstances, employers and employees can agree in writing that employees will cash out some of their long service leave.
Northern Territory
Legislation
If an employee’s pre-modern award does not contain an terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation to long service leave, employees in the Northern Territory are mostly covered by the Long Services Leave Act 1976 (the Act) unless they are government employees or a construction worker.
Entitlements
Under the Act, employees are entitled to 13 weeks of long service leave upon completion of at least 10 years of continuous employment with their employer. On top of this, they are entitled to an extra 1.3 weeks of long service leave for each additional year of service following the initial 10 years which can only be taken after an additional five years’ service.
Full-time, part-time and casual employees may be entitled to long service leave, provided they have completed the required amount of continuous service.
An employee, who has completed at least 7 years of continuous employment, but less than 10 years, will be entitled to pro-rata long service on termination where the employment ends due to retirement or account of illness, incapacity or domestic or other pressing necessity, and on the termination of employment by the employer for a reason other than serious misconduct.
Long service leave in the Northern Territory cannot be cashed out.
South Australia
Legislation
Employees in South Australia who are not covered by a pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are mostly covered by the Long Service Leave Act 1987 (the Act). It is important to note that the Act does not apply to Public Sector employees or employees covered by the Construction Industry Long Service Leave Act 1987 or the Long Service Leave (Portable Schemes) Act 2009.
Entitlements
Under the Act, employees are entitled to 13 weeks of long service leave upon the completion of at least 10 years of continuous employment with their employer. On top of this, they are entitled to an additional 1.3 weeks of long service leave for each full year of service after the initial 10 years.
An employee, who has completed at least 7 years of continuous employment, but less than 10 years, will be entitled to pro-rata long service on termination where the employment is terminated by the employer for any reason other than the employee’s serious and wilful misconduct, or the employee resigns and gives the correct notice.
By agreement between an employer and an employee, an employee (with at least ten years of continuous service) can cash out all or part of their entitlement to long service leave. This agreement must be in writing and signed by both parties.
Tasmania
Legislation
Employees in Tasmania who are not covered by a pre-modern award long service leave terms, portable long service leave, or long service leave schemes in a contract, enterprise agreement, policy, or specific legislation are mostly are covered by the Long Service Leave Act 1976 (the Act). However, please note that separate provisions under this Act apply to Mining employees. The Act may not apply to the construction industry or Public Sector employees.
Entitlements
Under the Act, employees are entitled to eight and two-thirds weeks of long service leave upon the completion of at least 10 years of continuous employment with their employer. On top of this, they are entitled to four and one-third weeks for each additional five years of service after the initial 10 years.
A full-time, part-time or casual employee who has completed at least 7 years of continuous service but less than 10 years, maybe entitled to pro-rata long service leave in certain circumstances. An employee will be entitled to pro-rata long service leave when they attain retirement age (65 years of age for a male, or 60 years of age for a female) or the employee dies, or where the employment is terminated by the employer for any reason other than serious and wilful misconduct.
An employee might be entitled to pro-rata long service leave where employment ceases due to illness or the employee resigns due to incapacity or ‘domestic or other pressing necessity.
By agreement between an employer and an employee, an employee (with at least ten years of continuous service) can cash out all or part of their entitlement to long service leave. This agreement must be in writing and signed by both parties.
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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.
This means employees continue to accrue long service leave whilst working for different employers within the same industry.
To find out more about long service leave entitlements in your state or territory, contact Employsure today for free initial advice.
The questions below have been answered according to the state and territory 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
When Does An Employee Qualify For Long Service Leave?
The qualifying period differs per state or territory, but in most cases an employee is entitled to long service leave after continuously working for their employer for a minimum of 10 years.
Does The Employer Pay Long Service Leave?
Yes, the employer is responsible for paying long service leave. Portable Long Service Leave is available in some states and territories for certain industries. It allows employees to continue to accrue long service leave whilst working for different employers within the same industry. In case of Portable long service leave the employer generally pays a levy for each employee to the scheme administrator.
How Much Long Service Leave Does An Employee Get After 7 Years?
It depends on the state or territory as each have different qualifying periods and calculation methods. In Victoria an employee can qualify for long service leave after 7 years in which case they will be entitled to 1/60th of their total weeks of continuous employment, or approximately 6.1 weeks leave.
In the ACT an employee is entitled to approximately 6.06 weeks of leave after 7 years. All other states and territories require a minimum of 10 years continuous service before an employee qualifies for long service leave, though an employee may be entitled to pro-rata long service leave if the employment ends earlier, depending on the state or territory, and the specific circumstances.
How Many Weeks Does An Employee Get For Long Service Leave?
It depends on the state or territory and how long the qualifying period is. It can range from 6 to 13 weeks for the initial qualifying period.
Does An Employee Accrue Long Service Leave While On Leave?
Yes, an employee continues to accrue long service leave when they are on authorised paid leave.
Is My Employee Entitled To Long Service Leave If They Resign?
Yes, provided they have met the qualifying period for long service leave in the state or territory where they work and they have unused leave. If they have not met the qualifying period, it will depend on whether the applicable act allows for pro-rata long service leave, what the qualifying period is for the pro-rata long service leave, and the circumstances of the resignation.
How Much Notice Is Needed For Long Service Leave?
Generally, long service leave must be taken as soon as possible after the employee becomes entitled to it but can be postponed if employer and employee agree.
If no agreement can be reached, the employer may be able to direct the employee to take the leave. Notice of a direction to take leave depends on the provisions of the Act applicable to your state or territory and can range from one month to 6 months. In Western Australia, an employer cannot direct an employee to take leave, and the employee must give at least 2 weeks’ notice of their intention to take long service leave.
Can I Refuse Long Service Leave?
Usually when an employee takes long service leave is agreed with the employee. Some Acts allow for an employer to direct an employee to take their long service leave if no agreement can be reached. Usually an employer can only refuse the request for long service leave on reasonable business grounds. The employer may want to consider that it may be more cost effective to pay the entitlement as the leave is taken rather than in a lump sum at the end of the employee’s employment.
Who Is Eligible For Portable Long Service Leave?
Portable Long Service Leave is available in some states and territories for certain industries. It allows employees to continue to accrue long service leave whilst working for different employers within the same industry.
Generally employees who are employed within the security, community services, building and construction, coal mining, and contract cleaning industries are entitled to portable long service leave, however it will differ per state or territory.
Can An Employee Work While On Long Service Leave?
They may be able to depending on the State or Territory and where the entitlement to long service leave derives from.
Are Casuals Entitled To Long Service Leave?
Under most State and Territory long service leave schemes, long-term casual employees are eligible for long service leave.
Is Super Payable On Long Service Leave?
Generally yes, however this may depend on the circumstances. As this is beyond the scope of Employsure advice, please consult the Australian Tax Office (ATO) or seek advice from a qualified tax professional.
How is Long Service Leave Calculated for Casuals?
Calculating long service leave for casuals can differ depending on the state or territory, and the relevant circumstances. You need to refer to the relevant Act that governs the state or territory where the employee is employed.
How is Long Service Leave Taxed?
Long Service Leave is taxed at marginal tax rates, i.e. included in ordinary income subject to the normal tax scale. Please consult a professional for accurate information.
What is Pro Rata Long Service Leave?
When employment ends before an employee has worked the total number of years needed to get the full long service leave entitlement, they can sometimes get paid out part of their long service leave. This is known as pro rata long service leave.
Whether an employee gets paid out pro rata long service leave when their employment ends depends on the long service laws in the state or territory they work in.
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