Long Service leave (LSL), what is it and who is entitled to it? We’re here to answer all your questions and help you prepare for LSL — as an employer or an employee. Each state and territory along with different industries across Australia have different Long Service Leave legislation and we will mostly be focusing on Victoria’s long service leave laws.
For more information on your specific industry and/or your state/territory visit the Fair Work Ombudsman Website here: fairwork.gov.au/leave/long-service-leave
Long service leave is a nation wide entitlement for most long serving employees.
This includes employees who are:
- Full time
- Part time
- Fixed Term
How does long service leave work?
In Victoria, Long Service Leave is accrued at a rate of one week for every 60 weeks of continuous work. This works out to be about 0.866 of a week each year. After 7 years of service, employees are entitled to take their accrued leave. Long Service Leave is accrued even during a time of paid leave (eg during annual leave).
It is the employers responsibility to keep long service leave records and to provide them to their employees on request which is why having good staff records is really important when on-boarding new staff. The Victorian Wage Theft Act 2020 makes it a crime to forge or not keep records to gain a financial benefit.
For a good resources on keeping staff records, visit Business Victoria: business.vic.gov.au/business-information/staff-and-hr/employer-responsibilities/keep-good-staff-records
Long Service Leave in your accounting software
You can set up long service leave in your cloud accounting software to manage and calculate it for you. To find out how to set up long service leave in Xero, check out their article here: Set up long service leave in Xero
If you need some personalised help with setting up your accounting software, our team are ready to guide you through the process - feel free to contact us
Who is entitled to long service leave?
Long service leave is entitled to most long serving employees who have worked for 7 years, including:
- Full time
- Part time
- Fixed Term
Are casuals entitled to long service leave?
Yes, casual employees are entitled to long service leave if they are employed on a continuous basis. According to the Long Service Leave Act 2018, employment is deemed continuous on the bases that there is not a break of more that 12 weeks between any two instances of employment.
For more information on Long Service leave for casual and seasonal workers, visit: vic.gov.au/long-service-leave
Long Service Leave Calculation: How much long service leave after 7 years?
For most full time employees, it works out to be about 6 weeks for 7 years worked. Long Service Leave is accrued even during a time of paid leave (eg during annual leave) but not during unpaid leave.
Let’s look at an example:
Aaron is full time and he has worked for 8 years and 5 weeks for the one company. He is keen to plan an overseas trip to Europe and asks his employer how much long service leave he is entitled to. The employer calculates his leave:
- 8 years multiplied by 52 weeks = 416 weeks.
- 416 weeks + 5 weeks = 421 weeks.
- 421 weeks divided by 60 = 7 weeks.
Aaron is entitled to 7 weeks paid long service leave for his Europe trip.
Part-Time, Casual & Fixed Term
We recommend using the Long Service Leave Calculator to work out the exact amounts for your employee as it depends on hours worked over the years. You can find the calculator and more information by visiting the following links:
Comprehensive Guide To The Victorian Long Service Leave Act 2018: https://www.vic.gov.au/comprehensive-guide-victorian-long-service-leave-act-2018/calculating-long-service-leave
Can you be forced to take long service leave Victoria
Due to numerous reasons, an employer may direct an employee to take Long Service Leave. They have to give at least 12 weeks written notice to be able to do so. If the employee does not want to take their long service leave, they can discuss. If in the case a dispute arises they can apply to the Industrial Division of the Magistrate’s Court for a decision.
Can you cash out long service leave?
Long Service Leave cannot be cashed out (most of the time) and is seen as an offence. The employee needs to take a break from work.
An employee can only have a payout of leave when they are terminating their employment and it ends before the leave is taken.
Who initiates the LSL conversation? Employers or employees?
As an employer it’s important to be aware and responsible for your employees and their Long Service Leave entitlements. Either the employer or employee can initiate discussions about their Long Service Leave arrangements however as an employer it’s best to initiate the discussion early so you can plan accordingly.
For employees, it’s your Long Service Leave and it’s best to not leave it entirely in the hands of your employer. Start planning early so you can make the most of your hard earned break. If you have access to a HR person, it’s worth chatting to them otherwise chat with your boss/manager. You are entitled to know what Long Service Leave you have accrued.
How employers can prepare for long service leave
- Know your obligations before you hire someone and have it laid out very clearly in their contract upon employment
- Use your accounting software to track LSL for your employees
- Start the conversation with your employees to prepare and plan for when they may like to take leave, that way you can hire important short term contractors/replacements where needed
- Chat to your accountant and get some advice! Don’t just see what happens. An accountant like us can help you plan in advance so your employees can enjoy their LSL, and you can avoid unplanned impacts on your business.