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What is long service leave?

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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When is an employee entitled to Long Service Leave?

The Long Service Leave Act 1955 provides full-time, part-time and casual workers in NSW to 2 months (8.67 weeks) paid long service leave when they have completed a continuous period of ten years service with the same employer.

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Is there a long service leave entitlement for less than ten years of service?

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 employee and not simply a rationalisation?
  3. Although the reason claimed may not be the sole ground which caused the 
    employee 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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How can long service leave be taken?

Long service leave can be taken in one continuous period of leave or, if the worker and employer agree, as follows:

  • where the leave owing is two months – in two separate periods
  • where the leave owing is between two months and nineteen and one-half weeks – in two or three separate periods
  • where the leave exceeds nineteen and one-half weeks – in two, three or four separate periods.
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How is long service leave paid?

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 for the last pay period prior to the leave being taken, or
  • the average weekly ordinary rate of pay earned during the previous five years.

For workers who have no fixed weekly number of hours of work (such as casual work) long service leave pay is based on whichever is the highest and at the current hourly rate of pay:

  • the normal weekly number of hours averaged during the previous period of 12 months, or
  • previous 5 years.

For example, if the 12 month average weekly hours are 20 hours per week and the 5 year average weekly hours are 22 hours per week, the highest average weekly hours i.e. 22 is used and multiplied by the current hourly rate. Refer to Section 3(2A) of the Long Service Leave Act 1955.

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, or
  • the average weekly ordinary rate of pay earned during the previous five years.

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 paid to workers who are otherwise paid in excess of $145,400 annually are not included.

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.

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What allowances are included in the ordinary rate of pay?

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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If LSL leave is taken at 10 years, how long does an employee have to wait to take more long service leave?

The Long Service Leave Act 1955 provides full-time, part-time and casual workers in NSW to 2 months (8.67 weeks) paid long service leave on completion of ten years’ service with the same employer and one month of paid leave for each additional five years’ service.

If the worker is currently employed between 10 and 15 years the worker may take paid leave of no more than two months (8.67 weeks) i.e. the 10 year entitlement. At 15 years, if the worker remains with the same employer there will be an entitlement to a further one month or 4.33 weeks paid leave.   

If the worker is terminated or ceases work for any reason between 10 and 15 years’ service, a pro rata or proportionate amount on the basis of 3 months for 15 years’ service is paid.

Once a worker has completed 15 years of service, only completed years of service will count towards long service leave, and the period of service ends at the last completed year. For example, if an employee has 15 years and 9 months service, only 15 years being the completed years of service will count towards long service leave.

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Can an employee be paid their long service leave instead of taking the leave?

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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Is continuous service broken when a worker takes leave?

A break in a workers service will not affect the continuity of service or the calculation of service in the following circumstances:

  • The absence of the worker is under the terms of the employee’s employment
  • The absence of the worker is on account of illness or injury.

A break in the workers service will not affect the continuity of service but does not count when calculating length of service in the following circumstances:

  • Made by the employer with the intention of avoiding any obligation imposed on the employer by the Act or by any obligation in relation to sick leave imposed on the employer by a State Instrument
  • Arising from an industrial dispute
  • Made by the employer by reason of slackness of trade
  • Arising from the absence of the worker for any cause by leave of the employer where the worker returns to the service of, or is re-employed by, the employer within 2 months of the date on which the service was interrupted, other than resignation by the worker.

 

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How does Parental Leave affect continuous service?

Parental Leave for national system employees 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 employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’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.

 

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What happens if the worker transferred from overseas?

The question of whether a worker, who started employment with a company overseas before transferring to a subsidiary or holding company in Australia, receives credit for his or her overseas service for the purpose of long service leave has not been dealt with authoritatively by Australian industrial tribunals except to the limited extent in International Computers (Australia) Pty Ltd v Weaving 1981 AILR 456; (1981) 2 NSWLR 64.

It was held that to be entitled to long service leave pursuant to the Long Service Leave Act 1955 (NSW) it is not necessary that all service should be substantially connected with NSW, but it is essential that at the time of completion, termination or cessation, the worker’s service may be said to be NSW service.
 

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What happens if the business is sold?

If a business is sold in whole or in part and that business,

  • continues by the new owner as the same business,
  • and the worker is employed in that business,

the continuity of the worker’s service is not considered to be broken and the entitlement to long service leave will continue.

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What happens if a public holiday occurs during long service leave?

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.

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How do Federal Awards affect the NSW Long Service Leave Act?

The NSW Long Service Leave Act 1955 may not apply if the employer is respondent to a pre reform federal award or is a member of an employer association (for example the Motor Traders Association) that made them respondent to a pre reform federal award.

This is because some pre reform federal awards provide for long service leave (see clause 4 of Part III of the federal Metal, Engineering and Associated Industries Award 1998) or there may be a separate long service leave award (see Vehicle Industry - Repair, Services and Retail - (Long Service Leave) Award 1977).

If you are unsure, we recommend that you check with the Fair Work Ombudsman on 13 13 94 or visit their website at: http://www.fairwork.gov.au/Pages/default.aspx

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Are there special arrangements for building industry workers and employees of cleaning contractors?

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 at: http://www.longservice.nsw.gov.au/

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What are the arrangements for workers in the Black Coal Industry?

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 at https://www.coallsl.com.au/

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Where can I find further information about long service leave?

To view the Long Service Leave Act 1955, go to:
https://www.legislation.nsw.gov.au/#/view/act/1955/38/whole

To lodge a complaint:

If you have not been able to resolve your concerns regarding your outstanding entitlements, you can ring NSW Industrial Relations on 131 628 to discuss or go to: 
https://www.industrialrelations.nsw.gov.au/lodging-complaint