26 Apr LONG SERVICE LEAVE – ARE YOU AWARE OF YOUR OBLIGATIONS TO LONG SERVING EMPLOYEES?

An employee who has a long period of service with an employer may be entitled to long service leave.

Generally, an employee’s entitlement to long service leave comes from the long service leave laws in the state or territory in which the employee works.  The applicable law sets out as a minimum:

1. the period of continuous service an employee must serve to be eligible for long service leave; and

2. the amount of long service leave an employee will receive upon reaching that minimum period.

TAKE FOR EXAMPLE QUEENSLAND

An employee principally performing work in Queensland will have an entitlement to long service leave in accordance with the Industrial Relations Act 2016 (“the Act”).

THE QUALIFYING PERIOD

Under the Act, employees are entitled to take 8.6667 weeks of paid long service leave after a period of 10 years continuous service.  After 10 years continuous service, an employee is entitled to take an additional 4.333 weeks of paid long service leave once they have completed a further 5 years’ continuous service.  Further, leave accrued on any continuous service past this point, is not subject to a qualifying period.

WHAT IS CONTINUOUS SERVICE?

Generally, continuous service refers to paid working time/leave.  The Act states that an employee’s continuity of service with an employer is not broken in certain circumstances, for example:

1. during a period of unpaid parental leave;

2. where an employee is terminated and then re-employed by the same employer within three months; and

3. where an employee is absent from work on leave (paid or unpaid) for any length of time, granted by the employer.

Accordingly, whilst these periods will not count towards the total length of service (i.e. the 10 years) they will not break service.

PAYMENT FOR LONG SERVICE LEAVE

Long service leave is paid at the ordinary rate being paid to the employee at the time the leave is taken. For instance, if an employee is paid above the minimum rate contained in an applicable Modern Award, the long service leave period is to be paid at that higher rate.

Casual employees are to be paid the loaded casual hourly rate – that’s right a casual employee may still be eligible for long service leave.

No leave loading is payable on long service leave.

ELIGIBILITY FOR PRO-RATA PAYMENT ON TERMINATION

Employees who have completed seven years continuous service with an employer, may have an entitlement to receive a pro rata payment of long service leave on termination, provided the primary reason for their termination fits within the following criteria:

1. the employee is dismissed by the employer for a reason other than their conduct, capacity or performance (i.e. by reason of a redundancy);

2. the employee is unfairly dismissed by the employer;

3. the employee terminates their service because of their illness, incapacity, or domestic or other pressing necessity; or

4. the employee’s service is terminated by their death.

“CASHING OUT” LONG SERVICE LEAVE

 Long Service Leave can only be cashed out (which means the employee is paid for the value of the leave rather than taking the leave) in the following circumstances:

1. the employee’s Modern Award, enterprise agreement or other registered agreement allows for cashing out; or

2. the employee makes an application to the Queensland Industrial Relations Commission for an order permitting “cashing out” on the basis of compassionate reasons or financial hardship. It should be noted, however, that this application can only be made after the employee has an entitlement to long service leave (i.e. the employee has completed 10 years of service).

For a summary of long service leave entitlements in other states and territories in Australia, please see the Quick Reference Guide below.

Notes:

1. The Fair Work Act 2009 (Cth) also contains provisions outlining the applicability of fair work instruments and pre-FW Act instruments in relation to long service leave entitlements. Some of the above State Acts also contain provisions about the application and effect of Federal Enterprise Agreements and Awards; and

2. Each Act also contains provisions about when leave is to be or can be taken.

If you have any questions about employees’ entitlements to long service leave, contact the team at HR Law today.

The content of this article is intended to provide a general guide to the subject matter.  Specialist advice should be sought about your specific circumstances.