Long Service Leave – What you need to know
Have you got superstar employees that have been on the books for a while?
Do you know about your long service leave (LSL) obligation for those superstars and the recent changes that have occurred in regards to long service?
You may not be aware the Victorian Parliament has replaced the old 1992 LSL Act with a new one commencing the 1st November 2018.
Let’s take this opportunity to have a refresher on LSL and look at the changes that have been made in this space.
What is LSL?
LSL is a period of paid leave granted to an employee who has served a specified period of continuous employment.
What is a specified period and continuous employment?
Continuous employment for a period of 7 years attracts LSL obligations at an accrual rate of 1/60th of the period.
Continuous employment has been amended in the new Act to provide that an employee’s employment is continuous despite an absence for any of the following reasons:
- annual leave;
- long service leave;
- paid or unpaid parental leave (other than in the case of a casual or seasonal employee). In addition any period of unpaid parental leave up to 52 weeks will count as service for the purpose of calculating LSL entitlements, where any period beyond 52 weeks will not count as service but will also not break continuity of employment. Previously, unpaid parental leave did not count towards calculating an employee’s period of continuous service.
- in the case of a casual or seasonal employee, paid or unpaid parental leave that is not longer than 104 weeks;
- carer’s leave;
- leave on account of illness or injury; or
- any other form of leave that is provided for under the employment contract.
- All periods of absence arising from the transfer of assets from one employer to another, if the employee usually performs duties which are connected with those assets.Where a leave period is for an extended period of time (52 weeks or more) this will still be considered continuous where it is deemed to be a period of employment in accordance with the employees contract or by written agreement with the employer and employee or if the leave is taken on account of illness or injury.The Act has also been amended in regards to re-employment in respect to termination/resignation/expiry of contract where an employee is re-employed within 12 weeks that employment is taken to be continuous.
When and how can my employees take LSL?
Previously employees’ were not entitled to take LSL until 10 years of continuous service had been completed with one employer. The new Act now allows employees take LSL after completing 7 years’ continuous employment with the one employer.
In addition there is now greater flexibility for employees to take LSL employees may now request to take long service leave for a period of not less than 1 day. It is important to note that employers cannot refuse an employee’s request to take long service leave unless the refusal is based on reasonable business grounds.
So how do you calculate LSL entitlements?
Where the hours have remained constant the accrual rate of 1/60th of the period of continuous employment still applies.
However where an employee’s working hours are not fixed or have changed during the last 2 years immediately before taking LSL, the employee’s normal weekly number of hours is the greater of the average weekly hours worked over:
- the past 52 weeks;
- the past 260 weeks; or
- the last period of continuous employment (including paid and unpaid leave).
Calculate your entitlements by using the Long Service Leave Calculator
What do you need to do now and are there penalties?
This is a good time and opportunity to review and ensure you have relevant policies, contracts and procedures in place to ensure all your employees’ entitlements are captured and calculated correctly.
It is especially important to ensure these are up to date and accurate as criminal penalties now apply to employers for:
- taking adverse action against an employee because they are entitled to LSL;
- failing to pay LSL entitlements;
- failing to pay additional amounts resulting from wage increases;
- making payment in lieu of LSL or in lieu of any part of LSL, except as permitted under the Act or the relevant fair work instrument;
- employing a person they know to be on LSL;
- failing to keep records relating to LSL in an acceptable form;
- failing to produce document or giving false or misleading documents; and
- failing to disclose that an employment agreement would modify or remove an employee’s LSL entitlements.If an employer is found guilty of any of the offences listed above, they may be liable to fines of up to:
- $2,520 in the case of a natural person and
- $12,600 in the case of a body corporate
In addition fines may be imposed for each day during which the offence continues and an employer found guilty of an offence may also receive a criminal record.
As a part of the amendments to the penalty regime, the limitation period for breaches of the Act has been increased to 6 years.
As always we’re here to help, if you’d like us to assist with a review of your employment procedures and employee entitlements please do not hesitate to contact us, or if you’d like further information on LSL you can access a range of FAQs here.
Author: Jessica Pol