Long Service Leave FAQs

Long service leave is a period of paid leave a worker can take after ten years’ service with the same employer, and further paid leave after each additional period of five years’ service with that employer.

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The Long Service Leave Act 1955 provides full-time, part-time and casual workers in NSW to 2 months (8.6667 weeks) paid long service leave when they have completed a continuous period of ten years service with the same employer. Casual workers became eligible from 9 May, 1985.

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Under some circumstances a worker who has completed five years (but less than ten years) of service may be entitled to a long service pro-rata payment if he or she:

• resigns as a result of illness, incapacity, domestic or other pressing necessity; or 
• is dismissed for any reason except serious and wilful misconduct; or
• dies.

The Long Service Leave Act 1955 does not define “domestic or other pressing necessity”. The test to determine whether a domestic or other pressing necessity exists is subjective and involves the examination of the claimant’s state of mind and an assessment of whether they can demonstrate that they genuinely considered themselves to be under a domestic or other pressing necessity.

An approach taken by the courts identified the following principles in determining whether a domestic or other pressing necessity exists.

1. Was the reason claimed for termination one which fell within the section dealing with pro rata entitlement?
2. Was such reason genuinely held by the worker and not simply a rationalisation?
3. Although the reason claimed may not be the sole ground which caused the 
   worker to decide to resign, was it the real or motivating reason for it?
4. Was the reason such that a reasonable person in the worker’s position might have felt compelled to resign?

A worker will need to demonstrate that their circumstances gave them no option but to resign from work. It is suggested that evidence supporting the circumstances of the worker be provided to the employer at the time of resignation to allow an assessment to be made.

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For workers who are remunerated wholly in relation to an ordinary time rate of pay, long service leave pay is based on whichever is the highest rate: 

• the workers ordinary pay on the day before the leave is taken, or 
• the average weekly pay, earned by the worker during the previous five-year period ending on the day before the leave is being taken, (excluding any weeks of unpaid absences from the 5-year average). 

For workers who have no fixed weekly number of hours of work (such as casual work) the normal weekly number of hours is calculated to be whichever is the highest rate:

• the average weekly number of hours worked during the previous period of 12 months ending on the day prior to the leave being taken, (excluding any weeks of unpaid absences), or 
• the average weekly number of hours worked during the 5 years ending on the day prior to the leave being taken, (excluding any weeks of unpaid absences). 

For more information on unpaid absences refer to FAQ 6. 

For workers who are remunerated otherwise than wholly in relation to an ordinary time rate of pay, such as piece workers or commission-only workers, long service leave pay is based on whichever is the highest rate:

• the average weekly ordinary rate of pay earned during the previous 12 months, (excluding any weeks of unpaid absences) or
• the average weekly ordinary rate of pay earned during the previous five years (excluding any weeks of unpaid absences).

Shift work, other penalty rates and overtime payments are not included. 

In addition, bonuses and commissions received by the worker are averaged over the previous 12 months (or averaged over the previous five years if the five year average pay rate is used) and added to the weekly rate used to calculate the leave payment. However, bonuses and commissions paid to workers who are otherwise paid in excess of $162,000 annually are not included (This figure is adjusted annually on 1 July).

Before taking long service leave, the worker may, with the agreement of the employer, be paid in full for the leave or at their ordinary pay rate at their normal regular pay intervals during their long service leave. 

Long Service Leave Act 1955 No 38 - NSW Legislation

Long Service Leave Regulation 2021 - NSW Legislation

Fair Work Regulations 2009 (legislation.gov.au)

In calculating the payment of long service leave, only weeks where a worker works and is paid should be included in calculations. This means unpaid absences, such as parental leave or unpaid sick leave should not be included when: 

• averaging a workers weekly pay earned during the five-year period ending on the day prior to the leave being taken, or 
• averaging the weekly number of hours during the period of 12 months or five years ending on the day prior to the leave being taken. 

For example, if a worker who works a fixed weekly number of hours and has taken 6 months (26 weeks) of unpaid parental leave during the previous five years, when calculating their average weekly pay you would divide their total weekly pay over the previous five years by 234 weeks not 260 weeks (i.e. 260 minus 26 weeks = 234). This is to exclude the 26 weeks where unpaid parental leave was taken and where the worker did not earn ordinary remuneration. 

Where a worker worked reduced hours as a result of a JobKeeper enabling direction, those periods should not be included in the calculation of average weekly number of hours. 

A JobKeeper enabling direction occurs when a direction is given by the employer to the worker to reduce their hours and the direction to work reduced hours is given because a worker could not be usefully employed on their normal hours because of: 

• the pandemic or  
• because of government initiatives to curb infection such as health orders 

In addition, the direction to reduce hours must have occurred in a period when: 

• the employer qualified for JobKeeper OR had a 10% decline in turnover certificate, and 
• the employer was paid JobKeeper in relation to the worker 

NB: It is not necessary that the JobKeeper payment was actually passed onto the worker by the employer. Employers should be aware that they were under an obligation to provide the Job Keeper enabling direction in writing.

Why we need to know both an employer’s eligibility and that the employer was paid JobKeeper in relation to a worker: 

An employer’s eligibility for JobKeeper and the reason for the direction to reduce hours are not enough to determine that a JobKeeper enabling direction applied to a worker. An employer’s eligibility for the JobKeeper scheme and an employer being paid JobKeeper for a particular worker are different separate events. An employer may not have been eligible to be paid JobKeeper for a worker who: 

• did not agree to be nominated for JobKeeper 
• was not an Australian resident 
• was a casual worker who was not employed on a regular and systematic basis during the 12-month period that ended 1 July 2020 
• was a permanent worker for another employer or nominated another employer to be paid JobKeeper for them 

Only work related allowances which are skill related, (e.g. leading hand allowance, site allowance, first aid allowance) are included in the calculation of ordinary pay. Expense allowances, (e.g. car allowance, meal allowance, living away from home allowance) are not included in the calculation of ordinary pay.

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No. The long service entitlement must be taken as leave. Payment for long service leave entitlements is only made on termination of employment.

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Parental Leave for national system workers is provided for under Division 5 Part 2-2 and related provisions of the Fair Work Act 2009. These provisions are extended to non-national system employees under Section 744 of the Fair Work Act 2009.

Section 22 of the Fair Work Act 2009 defines the meaning of service and continuous service.  Under this section any period of unpaid leave or unpaid authorised absence (such as parental leave) does not break a national system worker’s continuous service with his or her national system employer, but does not count towards the length of the worker’s continuous service.

Example: If a worker was employed for 10 years and took 1 year of parental leave, the worker would need to work a further 12 months to take the 10 year entitlement.

In December 2022, The NSW Court of Appeal’s decision in Wipro Limited v State of New South Wales [2022] NSWCA 265 (Wipro Decision) clarified the way a worker’s service which was performed outside of NSW should be treated when assessing their long service leave entitlements.

If there are multiple periods of service in different places outside and inside of NSW, each period of the worker’s service should be assessed to determine whether there is a substantial connection to NSW. 

This assessment should refer to the circumstances and factors known by the worker and the employer during each of those periods of service. 

Only periods of service with a substantial connection to NSW will count as service for the purposes of the Long Service Leave Act 1955.

Some factors that may be relevant to assessing the existence of a substantial connection include the following:

1. The contract of employment was made in NSW;
2. The worker received directions from NSW to work outside of NSW; or
3. The worker performing work in obedience to directions coming from NSW.

There may also be other factors which are not listed above.

An extra day must be included in the long service leave if it is a day the worker would have worked had they not been on long service leave.

Workers in the building and construction industry and workers of Cleaning Contractors who are registered with the Long Service Corporation may also have an entitlement under the NSW Long Service Leave Act 1955. For more information on the entitlement to long service leave under the NSW Long Service Leave Act 1955, refer to FAQs 2 and 3.

An employer is not required to automatically pay a registered worker any long service leave under the NSW Long Service Leave Act 1955 unless the worker applies to the employer for the leave, or payment on termination.

Special conditions may apply to workers in the building and construction industry and workers of Cleaning Contractors. For more information contact the Long Service Corporation on 131 441 or visit their website.

The NSW Long Service Leave Act 1955 may not apply to workers employed in the black coal industry. Long service leave in the black coal mining industry is administered by the Coal Mining Industry (Long Service Leave Funding) Corporation, an Australian Government agency.
 
The Coal Mining Industry (Long Service Leave Funding) Corporation may be contacted on 1300 852 625 or visit their website.

For more information on Long Service Leave, please view the Long Service Leave Act 1955 legislation.