For the majority of employees, long service leave is provided for in the relevant state/territory long service leave legislation. Long service leave technically doesn’t accrue for an employee and is best thought of as an entitlement when an employee reaches a certain period of service. Employees are then entitled to access this leave at that point in time. An employee may also be entitled to have the value of their long service leave paid out to them in certain circumstances such as resignation for certain reasons or termination by way of redundancy after a certain period of time.
The source of an employee’s long service leave entitlement may vary between states or depending on whether an employee has a preserved entitlement to long service leave that has been derived from a previous Modern Award that applied to their employment. For this reason, we always recommend seeking advice in this area to gauge what will apply to the employee and the parameters around how the leave can be taken.
Each Australian State and Territory has legislation dealing with the entitlement to long service leave. The entitlement is largely the same, but there are some subtle yet important differences that employers need to understand. The complexity of this legislation often creates headaches for employers, particularly those who operate across multiple States and Territories. In addition, the failure to keep proper records will often count against the employer should a dispute arise.
What is long service leave?
Long service leave is a form of paid leave for employees who have been working with your business for a long period of time. The entitlement to long service leave is in addition to other forms of paid leave such as annual leave, sick leave and compassionate leave.
Generally speaking, an employee who has been continuously working with your business for at least ten (10) years will be entitled to two (2) months (or 8.67 weeks) of paid long service leave. In some circumstances, however, an employee may be entitled to a proportionate amount of long service leave in respect of their completed service, despite not having attained ten (10) years of service. There is also usually an additional entitlement to long service leave where the employee’s length of continuous service exceeds ten (10) years.
In most cases, the entitlement to long service leave will be derived from legislation applicable in the State or Territory in which the employee is ordinarily based. But the complexity of this legislation often creates headaches for employers, particularly those who operate across multiple States and Territories or where record keeping might not be up to standard.
What issues arise in relation to long service leave?
Disputes often arise in relation to issues like whether the period of service was “continuous”, whether the employer can direct the employee to take his or her long service leave, the rate at which long service leave will be paid and whether an employer and an employee can agree to “cash out” his or her long service leave.
In most cases, the answer to these questions and many more will depend on the legislation applicable in the State or Territory in which the employee is ordinarily based. For example, although an employer generally has the right to direct an employee to take his or her long service leave upon providing the employee with sufficient notice, this is not always the case (e.g. in Western Australia). In addition, while long service is generally paid at the employee’s ordinary rate of remuneration, in some circumstances this may require an average to be taken (such as where the employee’s hours have varied).
The failure to keep proper records can also cause headaches for employers, particularly where there is a dispute as to whether the period of service was “continuous” or not. In the absence of proper records showing a break in service (e.g. due to a resignation by the employee) it will often be difficult for the employer to refute a claim by the employee that his or her service was in fact continuous.