Long service leave is a complex topic that can be confusing for both employers and employees.
In recent months, Woolworths and its subsidiaries have been in the news for owing more than $10 million in long service leave payments to 1,235 former employees.
This guide covers everything you need to know about long service leave in Australia, including who is entitled to it, how much an employee can get, when they can take it, how it’s calculated and more.
What is long service leave (LSL)?
Long service leave (LSL) is a type of paid leave that employees are entitled to in Australia after working for the same employer for an extended period of time, typically between 7 and 10 years.
Long service leave (LSL) is separate from annual leave and is granted in addition to it.During LSL, employees continue to accrue annual leave as normal, and they are entitled to a minimum of the prescribed National Employment Standards.
Who is entitled to long service leave?
Most employees are entitled to long service leave after a certain period of time working for the same employer, as outlined in state and territory long service leave laws. Long-serving casuals may also be eligible for long service leave in some states and territories.
The specific eligibility requirements and entitlements vary between jurisdictions and can be found by contacting the relevant agency in your state or territory:
- ACT: WorkSafe ACT
- NSW: NSW Industrial Relations
- NT: NT Government
- Qld: Queensland Industrial Relations
- SA: SafeWork SA
- Tas.: WorkSafe Tasmania
- Vic.: Wage Inspectorate Victoria
- WA: Department of Mines, Industry Regulation and Safety.
However, there are some exceptions and special cases to consider:
| Freelancers and Contractors | Freelancers and contractors are not eligible for long service leave entitlements, unless they work in a select industry such as mining, cleaning, or construction.
For example, builders in NSW can register with the Long Service Leave Scheme, which allows them to accrue long service leave across multiple employers and projects. |
| Federal and Local Government Employees | Federal employees or those working for local government may have different long service leave entitlements. |
| Multinational Companies | Employees of multinational companies who complete most of their service overseas may not be eligible for long service leave. This can vary depending on the specific circumstances, so it’s important to check the details of their employment contracts and the relevant laws in their state or territory. |
| Less Than 5 Years of Service | Employees who leave an employer before completing 5 years of service are ineligible for long service leave. |
When do employees 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.
Do industry award entitlements impact long service leave?
Long service leave entitlements can be influenced by industry award provisions in Australia. If an employee falls under a pre-modern award that addresses long service leave, the terms specified in the award will determine their entitlements, rather than the state or territory long service leave laws.
These award provisions outline the qualifying period (e.g., 7 years) and the amount of long service leave the employee is entitled to receive. It is important to note that this applies to industries covered by the award and is applicable for pre-modern awards in effect before 1 January 2010.
|
Example: Long service leave in a pre-modern award |
|
|
Company Name |
Savory Cuts Butchery |
| Location |
Melbourne, Victoria |
|
Award |
|
| Employee Name |
Sarah |
| Employment Tenure |
12 years (part-time) |
In this example, Sarah has been working part-time for the Savory Cuts Butchery chain in Melbourne, Victoria, for a remarkable period of 12 years. The company operates under the Meatcraft Award. Sarah’s entitlement to long service leave is determined by the provisions outlined in her federal pre-modern award, instead of the specific long service leave legislation applicable in Victoria.
How is long service leave calculated?
Long service leave is calculated differently depending on the state or territory where the employee is employed.
For example, in New South Wales, employees are entitled to 2 months (8.6667 weeks) of long service leave after completing 10 years of continuous service. For every additional 5 years of service, they receive an additional month (4.3333 weeks) of long service leave.
The payment for long service leave is usually based on the employee’s ordinary pay rate, which excludes allowances, shift loadings, penalties, and overtime.
However, payment details vary by state or territory, so check the Fair Work Long service leave page for specifics.
It’s also worth noting that unused long service leave must be paid out at the end of employment, and in some cases, pro-rata long service leave may be paid out if the employee leaves their job before they’ve worked the total number of years needed to get the full entitlement. Again, the specifics of this will depend on the state or territory’s laws.
Long service leave FAQs
Q: Does an employee accrue long service leave while on leave?
A: Yes, an employee continues to accrue long service leave when they are on authorised paid leave.
Q: Can employees cash out long service leave?
A: Pro-rata arrangements for cashing out long service leave are available in every state after a certain period of service, usually 5 or 7 years. The remuneration for cashing out long service leave is based on the employee’s normal rate of pay. For casual employees, this rate includes any applicable loading.
Q: What is pro rata long service leave?
A: Pro rata long service leave refers to the situation where an employee’s employment ends before they have completed the required number of years to receive the full long service leave entitlement. In such cases, the employee may be entitled to be paid out a portion of their accrued long service leave. The eligibility and conditions for pro rata long service leave vary depending on the long service laws of the state or territory where the employee works.
Q: How many weeks’ notice is required to take long service leave?
A: Employers should expect to receive at least two weeks’ notice before long service leave. This is a requirement in certain states like Western Australia. However, in other states, like Victoria, there is no minimum notice period for long service leave.
Q: Is super payable on long service leave?
A: Generally, yes, superannuation (super) is payable on long service leave. However, specific circumstances may apply. It is recommended to consult the Australian Tax Office (ATO) or a qualified tax professional for accurate information.
Q: How is long service leave taxed?
A: Long service leave is taxed at marginal tax rates, meaning it is included in the employee’s ordinary income and subject to the normal tax scale. For precise information, it is advisable to consult a professional tax advisor.
Q: What happens to an employee’s accrued long service leave if their employment ends?
A: If an employee has worked for the same employer for a period of 5-7 years (depending on the state), they may be eligible to claim their accrued long service leave on a pro rata basis when their employment ends.
- In some cases, if an employee is moving to an associated business or is covered under a portable long service scheme, they may be able to transfer their accrued long service leave to their new employer. Additionally, if there is a change in business ownership, employees are generally entitled to transfer their accrued long service leave.
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