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If you employ staff in Victoria, the new long service leave laws that took effect on 1 November 2018 will impact your business. Before the Long Service Leave Act 2018, Victoria’s long service leave legislation was more than 25 years old. In those 25 years, the labour force has modernised in various ways. These changes include the increased:

  • mobility of staff between roles;
  • participation of women in the workforce; and
  • uptake of parental leave.

This article outlines four fundamental changes created by the new Long Service Leave Act and offers some suggested next steps for employers in Victoria.

When is an Employee Entitled to Long Service Leave?

The new LSL Act has decreased the required period of continuous employment with one employer from 10 years to seven years.

In 2018, more than one million Australians changed employers or the business they were running. Recent statistics indicate that Australians change jobs on average every three years. Even for mature employees (aged over 45 years), Australians are changing jobs about every seven years.

The new LSL Act shortens the necessary length of service to be eligible for long service leave to seven years. This 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 now acknowledges.

Does Long Service Leave Accrue During Parental and Sick Leave?

From 1 November 2018, an employee’s long service leave will accumulate during:

  • any period of paid parental leave; and
  • a period of unpaid parental leave up to 52 weeks (or longer, if agreed with the employer).

Notably, an employee that takes parental leave will not break their continuity of employment with an employer unless:

Previously, an employee did not accumulate any long service leave during paid or unpaid parental leave. As a result of that, any employee taking parental leave past 52 weeks would break their continuity of employment and effectively restart the clock on their long service leave after that point.

How Much Flexibility Does an Employee Have When Taking Long Service Leave?

From 1 November 2018, an employee eligible to take long service leave has far more flexibility in the scheduling of that leave. Now, an employee can take long service leave in short spurts of at least one day at a time or in blocks as they desire. 

Previously, the law required that employees take long service leave in:

  • a 13 week block; or
  • 13 weeks spread over a maximum of three blocks.

An employer’s consent was required if an employee wanted to take a minimum of a four week block of leave. This likely required extensive planning by the employee and some potentially tricky negotiations. The new LSL Act removes these obstacles to taking short bursts of leave, offering employees easier access to hard-earned leave.

What Happens if My Employee’s Hours Change Over Their Years of Employment?

A long-standing employee eligible for long service leave 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.

Now, if an employee’s fixed work arrangement changes in the 104 weeks before taking long service leave, long service leave is calculated at the average of either the:

  • last 12 months;
  • last five years; or
  • whole period of their continuous employment, whichever is greatest.

I’m an Employer in Victoria. What Do I Need To Do?

As an employer, you should promptly make changes to reflect any new legal obligations under the LSL Act. For example, you may need to update:

  1. employee records;
  2. employee documentation, including all employment agreements and policies;
  3. employment and human resources processes; and
  4. payroll systems including any systems that calculate leave accrued.

The new LSL Act took effect on 1 November 2018. It is vital that you implement changes effective from that date for all employees. Ensure that you also remember to update the entitlements of your employees on leave.

Employers 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 an employer to:

  • not disclose to an employee (with seven days notice) that an employment agreement would modify or remove an employee’s long service leave entitlements under the LSL Act; and
  • take action against an employee that is trying to take long service leave or requests information about their entitlements.

Additionally, the range of penalties is substantially more extensive under the new LSL Act and could be between:

  • 12 penalty units ($1,934.28) for an individual; and
  • 60 penalty units ($9,671.40) for a corporation.

Key Takeaways

The new LSL Act brings significant improvements and increases employer obligations. The legislation takes effect from 1 November 2018 and employers are obliged to comply with the new LSL Act or risk significant penalties.

LegalVision’s employment lawyers are available to assist you in updating your internal policies and employment agreements to reflect your new obligations. If you have any questions, contact LegalVision’s employment lawyers today on 1300 544 755 or fill out the form on this page.

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