Long Service Leave.

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Long Service Leave

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 theses employees may be entitled to long service leave as a result of their applicable 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.

These laws set out:

  • how long an employee has to be working to get long service leave (e.g. after 7 years)
  • how much long service leave the employee gets

In most states and territories, long-term casual employees are eligible for long service leave.

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 for each state and territory. 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. There are two key aspects to each region’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

Long Service 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 state or territory in which they are employed. In most cases, the employee’s ordinary pay rate continues during a long service leave period. 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 (ie what they would have worked if they hadn’t been on leave), generally without any additional benefits and payments, though this depends on the state or territory. 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 relevant state or territory legislation, and the method that provides the greater pay rate will apply; usually one of the below:

  • 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.

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. 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 still counts as Continuous service:

  • 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 per state or territory. 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 laws in the state or territory they work in. Generally, employees will get pro-rata leave after a certain amount of time if they resign as a result of death, illness, incapacity, retirement, domestic or other pressing necessity but the time and reasons differ per state or territory. There is no pro-rata leave in Victoria.

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State And Territory Legislation

As mentioned previously, 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, be advised that the information should be used as a guide only. If you are unsure, please call Employsure for free initial advice.

New South Wales

Employees in New South Wales are covered by the Long Service Leave Act 1955 (the Act). 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: On 25 March 2020, the New South Wales Government temporarily amended the Act until March 2021 to allow for greater flexibility during the COVID-19 pandemic. For more information, visit the NSW State Government website.)

Victoria

Employees in Victoria are covered by the Long Service Leave Act 2018 (the Act). 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.

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.

Queensland

Employees in Queensland are covered by the Industrial Relations Act 1999 (the Act). 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.

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 must register with QLeave (the relevant authority) and advise when an employee starts and ends their employment with the business.

Cashing Out Leave

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.

Australian Capital Territory

Employees in the Australian Capital Territory are covered by the Long Service Leave Act 1976 (the Act).  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.

Please note that the Act does not apply to Public Sector employees or employees covered by the Long Service Leave (Portable Schemes) Act 2009.

Western Australia

Employees in Western Australia are 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 covered the employer and its employees before 1 January 2010; or, in some circumstances, to employees covered by a federal registered agreement.

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.

Cashing Out Leave

In some circumstances, employers and employees can agree in writing that employees will cash out some of their long service leave.

Northern Territory

Employees in the Northern Territory are covered by the Long Services Leave Act 1976 (the Act).

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 week of long service leave for each additional five years of service following the initial 10 years.

South Australia

Employees in South Australia are 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.

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 one and a third week of long service leave for each full year of service after the initial 10 years.

Cashing Out Leave

By agreement between an employer and an employee, an employee (with at least ten years 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

Employees in Tasmania are covered by the Long Service Leave Act 1976 (the Act). However, if you are an employer in the mining industry, please note that separate provisions under this Act apply to construction industry or Public Sector employees.

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.

Cashing Out Leave

By agreement between an employer and an employee, an employee (with at least ten years 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.

Portable Long Service Leave

Some Australian states and territories have legislation to provide employees in the security, community services, building and construction, 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.

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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 Do You Calculate Long Service Leave?

    Calculation methods 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.

  • 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.

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