Table of Contents
- When is an Employee Entitled to Long Service Leave?
- Does Long Service Leave Accrue During Parental and Sick Leave?
- How Much Flexibility Does an Employee Have When Taking Long Service Leave?
- What Happens if My Employee’s Hours Change Over Their Years of Employment?
- What Do I Need to Do as an Employer?
- What Happens if Employment is Terminated?
- Are Independent Contractors Entitled to Long Service Leave?
- Key Takeaways
- Frequently Asked Questions
If you employ staff in Victoria, your employees are entitled to long service leave (LSL). Therefore, it will be helpful to understand the Long Service Leave Act 2018 (‘LSL Act’). Before the implementation of this Act in November 2018, Victoria’s long service leave legislation was more than 25 years old. During that time, the labour force modernised in various ways, making the previous act outdated. This article will briefly outline the LSL Act and what this means for your business.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
When is an Employee Entitled to Long Service Leave?
Employees in Victoria are entitled to long service leave after seven years of service with their employer. Before the LSL Act, it was a requirement for employees to have ten years of continuous service with their employer.
With data showing that Australians change jobs every three years on average, decreasing the length of service to be eligible for LSL was necessary. Additionally, it is far more consistent with Australia’s trend of increased job mobility. An Australian who has remained with an employer for seven years would likely see themselves as a long-standing employee, and the LSL Act now acknowledges this.
Does Long Service Leave Accrue During Parental and Sick Leave?
Your employee’s LSL will accumulate during:
- any period of paid parental leave; and
- a period of unpaid parental leave of up to 52 weeks (or longer if agreed to between you and your employee).
Further, an employee that takes parental leave will not break their continuity of employment with your business unless they:
- are a casual or seasonal employee; or
- take more than 104 weeks of paid or unpaid parental leave.
Previously, an employee did not accumulate long service leave during paid or unpaid parental leave. As a result, any employee taking parental leave past 52 weeks would break their continuity of employment and effectively restart the clock on their long service leave.
Continue reading this article below the formHow Much Flexibility Does an Employee Have When Taking Long Service Leave?
An employee eligible to take LSL has far more flexibility in scheduling that leave. For example, an employee can take long service leave in short spurts of at least one day or larger blocks as desired.
Previously, it was a legal requirement that employees take long service leave in:
- a 13 week block; or
- 13 weeks spread over a maximum of three blocks.
It was also a requirement to obtain the employer’s consent if an employee wanted to take a minimum of a four-week leave. This likely required extensive planning by the employee and some potentially tricky negotiations.
What Happens if My Employee’s Hours Change Over Their Years of Employment?
A long-standing employee eligible for LSL may have had several arrangements with your business over the years. The new LSL Act acknowledges these variations and does not penalise an employee that may have reduced their hours after a long period of working full-time.
If an employee’s fixed work arrangement changes in the 104 weeks before taking long service leave, it will be calculated at the average of either the:
- last 52 weeks (12 months);
- last 260 weeks (five years); or
- whole period of their continuous employment, whichever is greatest.
What Do I Need to Do as an Employer?
As an employer, you should ensure that your Victorian employees are receiving the LSL entitlements they are entitled to. Additionally, you should ensure that the provisions of Victoria’s LSL Act are reflected in:
- employee records;
- employee documentation, including all employment agreements and policies;
- employment and human resources processes; and
- payroll systems, including any systems that calculate leave accrued.
You should also be aware that non-compliance with the new LSL Act can result in criminal proceedings and penalties. Notably, it is an offence for you to:
- not disclose to an employee (with seven days’ notice) that an employment agreement would modify or remove an employee’s entitlements under the LSL Act; or
- take action against an employee trying to take long service leave or requests information about their entitlements.
Penalties for failure to comply with the LSL Act are up to:
- 12 penalty units for an individual; and
- 60 penalty units for a corporation.
What Happens if Employment is Terminated?
If an employee’s employment ends after seven years of continuous service to your business, you must pay their LSL entitlements. This is the case regardless of why the employment ended. You should pay LSL entitlements on the employee’s final day of employment.
Are Independent Contractors Entitled to Long Service Leave?
Independent contractors are not considered employees and therefore are not typically entitled to LSL. However, you must ensure your independent contractors are genuine and are not, in fact, employees. Independent contractors who are misclassified will be entitled to LSL.
Key Takeaways
If you employ staff in Victoria, your employees are entitled to long service leave per the Long Service Leave Act 2018. This act significantly improves employees while increasing your employers’ obligations. For instance, some key provisions in the 2018 LSL Act include:
- employees in Victoria are entitled to long service leave after seven years of service with their employer;
- increased flexibility for scheduling leave; and
- a greater understanding of changes in work hours over years of service.
If you need assistance understanding Victoria’s long-service laws, our experienced employment lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Employees in Victoria are entitled to long service leave after seven years of service with their employer. However, this was reduced from ten years of service, as more Australians are changing their employment more frequently.
Your employee’s long service leave will accumulate during any period of paid parental leave and unpaid parental leave up to 52 weeks (or longer if agreed to between you and your employee).
We appreciate your feedback – your submission has been successfully received.
