Victorian Long Service Leave Entitlements & Upcoming Legislative Change

25 June 2018

On 1 November 2018, the Long Service Leave Act 1992 (Vic) will be replaced by new legislation. The Long Service Leave Bill 2017 was recently passed by parliament, and given the significant changes that will be implemented, it is essential that employers properly understand the new law.

Pursuant to the Act, employers will be required to provide employees exercising their long service leave entitlements with increased flexibility. Further, the Act will introduce substantial changes in respect of parental leave and the effect such absences will have on the calculation of an employee’s continuous service, and for employers who engage workers on a casual basis.

The Current Law

As the law currently stands in the state of Victoria:

  1. an employee may take long service leave after 10 years of continuous service with the same employer, however can be paid out (pro rata) for long service leave when his/her employment ceases after seven years of continuous service;
  2. an employee must generally take his/her long service leave in one period (however he/she is able to take the first 13 weeks of his/her long service leave in two or three periods, and any further leave beyond the first 13 weeks in two separate periods)
  3. upon the sale of a business or the transfer of its assets, and if the new business owner agrees to retain the business’ employees, the employees’ continuous service will not break due to the transfer of business ownership;
  4. parental leave does not count towards an employee’s continuous service;
  5. if parental leave is taken for longer than 12 months, the employee’s continuity of service will be broken;
  6. a casual employee will be entitled to long service leave (provided all requirements are met) but for when there is more than a three month break between his/her shifts; and
  7. an employee’s entitlement to long service leave is to be calculated using the greater of the employee’s average hours of work over the previous:
    1. 12 months; or
    2. five years.

The Legislative Change

In light of the new law, and as of 1 November 2018, in Victoria:

  1. an employee will be entitled to take long service leave (pro rata) after seven years of continuous service with his/her employer;
  2. an employee may take long service leave one day at a time (similar to the way in which annual leave can be taken), instead of having to take his/her long service leave in a prescribed number of periods as described above;
  3. as foreshadowed, where there is a transfer in the ownership of a business, an employee’s continuous service will not be broken due to the change in proprietorship, provided his/her duties are performed in connection with the “assets” of the business.

    As the law currently stands in Victoria, the term “assets” refers to plant, land and equipment. Pursuant to the updated legislation however, “assets” will be defined as tangible and intangible assets. This effectively broadens the term’s meaning, and it is expected that the number of situations in which employees’ long service leave entitlements transfer from one employer to another will significantly increase;

  4. paid parental leave and the first 12 months of unpaid parental leave will count towards an employee’s continuous length of service, instead of causing a break in an employee’s continuity of service and/or not counting at all;
  5. a casual employee will remain entitled to long service leave even where there is a three month break between his/her shifts, when one or more of the following applies:
    1. the employee has taken up to two years of parental leave;
    2. the employer and employee have previously agreed to the absence;
    3. the break between shifts is caused by seasonal factors; and/or
    4. the employee reasonably expected to be re-employed by the employer;
  6. an employee’s long service leave entitlement is to be calculated using the greater of the employee’s average hours of work over:
    1. the previous 12 months;
    2. the last five years; or
    3. the entirety of his/her continuous service period.

Likely Impact for Employers

In respect of the above, it is crucial that employers properly understand long service leave entitlements, and update their business’ policies to ensure that all procedures and calculations are conducted in accordance with the new legislation.

Contraventions of the new law will attract criminal penalties, and entice fines of 12 penalty units for individuals and 60 penalty units for corporations.

If you are at all unsure as to whether your business’ policies and procedures are in line with the new legislation, contact Hentys. Our experienced employment lawyers will assist you to ensure that your business is operating in accordance with the impending legislation.