This article forms part of our series of blogs covering the National Employment Standards (NES). These are the minimum terms of employment that apply to those Australian workers who are part of the National Workplace Relations System (which is the vast majority of workers, refer here for more details), regardless of whether or not they are covered by an Award.
Whilst employers and employees can agree to terms that supplement the NES, they cannot provide for conditions that are less than the NES or the national minimum wage. The NES cannot be excluded, modified, or reduced; they form part of the “safety net” that covers the majority of Australian workers.
What’s the NES Position on Long Service Leave?
Generally speaking, an employee qualifies for an entitlement of long service leave (LSL) after a long period of working for the same employer.
Under the NES, LSL is currently a transitional entitlement pending the development of a uniform national standard (FYI, there are no present indications that a uniform national standard will be prescribed any time soon). That means that most employees are currently covered by relevant State or Territory LSL laws, which differ from one another.
Note: if your business/organisation has an enterprise agreement in place, that agreement may include provisions that impact LSL entitlements for your staff. Awards also sometimes contain provisions relevant to LSL, so be sure to check those as well.
When does a LSL entitlement arise?
- The period of service required before an employee becomes entitled to LSL varies by state/territory (eg. In NSW, 10 years continuous service is required, though there may be an entitlement to pro-rata LSL after 5 years in certain circumstances, refer below)
- Note that contrary to popular belief, some jurisdictions (including NSW) also allow casuals to qualify for LSL after extended service.
Portable long service leave schemes
Certain industries in some states/territories (such as the Building and Construction, Community Services and Contract Cleaning industries in NSW), have a portable LSL scheme, whereby workers may become eligible for LSL after a period of service to the industry, even if they have workedshorter periods of timewith multiple employers. These schemes are often supported via a levy paid by eligible employers and others who opt-in to the scheme.
For additional information regarding portable LSL schemes in NSW, click HERE. Check with relevant authorities in other states/territories whether similar schemes apply to your industry.
So what’s the entitlement?
(NOTE THAT THE FOLLOWING INFORMATION RELATES TO WORKERS IN NSW. CHECK WITH RELEVANT AUTHORITIES FOR DETAILS OF PROVISIONS IN OTHER STATES/TERRITORIES)
- The Long Service Leave Act 1955 (LSL Act) entitles full-time, part-time and casual workers to 2 months paid long service leave on completion of 10 years continuous service and one month of paid leave for each additional 5 years’ service. Note that the LSL Act defines a month as 4 1/3 weeks (4.3333 recurring).
- A worker who has completed more than 5 years but less than 10 years continuous service is entitled to a long service pro-rata payment if they (a) are dismissed for any reason other than serious and wilful misconduct, OR (b) die.
- Also, a worker who has completed more than 5 years but less than 10 years of continuous service may be entitled to a long service pro-rata payment if they resign on account of illness, incapacity, domestic or other pressing necessity. Refer THIS article for further details re the term “domestic or other pressing necessity”.
Taking Leave
- It’s generally intended that LSL be taken as a single continuous period, though employers and workers can agree for LSL to be taken in 2 or more periods of not less than 1 day.
- Employees must provide notice of their intention to take LSL and agree on timing with their employer. The amount of notice required may be specified in your organisation’s Leave Policy. Employers cannot unilaterally refuse a reasonable request but may negotiate timing to suit operational needs. In certain circumstances, an employer may be able to direct an employee to take LSL, though at least one month’s notice is required.
- Unused LSL generally carries over indefinitely until taken or paid out on termination.
Additional Info (again, applicable to NSW workers):
- An employee may take LSL in advance of the standard entitlement if both the employee and employer agree. From 24 March 2022, any advance must be for at least one day (not part of a day).
- There is no provision in NSW for employers and workers to make agreements for the cashing out or payout of accrued long service leave whilst the worker is still employed.
- If a public holiday occurs during a period of LSL and it is a day the worker would have received payment for had they not been on LSL, they should receive payment and an extra day must be added to their LSL entitlement.
- Unpaid parental leave (or a period of unpaid leave in which the worker receives Centrelink payments for Parental Leave Pay) does not count as service but does not break service. If a worker who was employed for 10 years took a total of 12 months of unpaid parental leave, for example, they would need to work a further 12 months to have served the 10 years necessary to accrue the LSL entitlement.
Further Guidance & Resources
Long service leave can be tricky, particularly if a worker has been engaged across different States/Territories, if they have transitioned between different types of employment (full-time, part-time, casual), worked irregular hours and/or if there are claims or potential claims for pro-rata LSL.
For further information relating to LSL entitlements in NSW, including FAQs, calculators and the Long Service Leave Act itself, click HERE.
For links to details of LSL provisions relating to other States and Territories, visit the Fair Work Ombudsman’s LSL page HERE.
If you need further assistance, we can potentially help you by:
- Creating a bespoke LSL policy that aligns with the NES, the NSW LSL or other State/ Territory Act and any applicable Awards or agreements.
- Clarifying eligibility triggers, accrual rates, notice requirements and payout entitlements.
- Ensuring compliance with record-keeping and payment obligations under relevant laws.
This article provides general information which we believe to be correct at the time of posting. It is a summary, relates mainly to workers in NSW and must not be considered complete, professional or legal advice. If you’re an employer and need support that takes into account your particular circumstances, please contact us directly.
