Long service leave can be a tricky issue for employers: When do my employees accrue an entitlement? What rate of pay applies? What does “pro rata” long service mean, and when does this arise?
Unlike most employment entitlements for private sector employees, long service leave is one matter that is still governed by state-based legislation and each state is slightly different.
Unless long service leave is dealt with in an industrial instrument, the Long Service Leave Act 1976 (LSL Act) governs the minimum long service leave terms of most private sector employers and employees in Tasmania. There are other laws that apply to workers in the construction industry and the State Service.
The entitlement to long service leave
Employees are entitled to:
- 8 2/3 weeks of long service leave after 10 years of continuous employment; and
- 4 1/3 weeks of long service leave after each subsequent 5 years of continuous employment.
- For mining employees – 13 weeks after 10 years of continuous employment.
After 10 years of service, employees must be paid out for their long service leave entitlements when their employment ends.
What is “pro-rata” long service leave?
In some cases, a pro rata entitlement can arise before the employee completes 10 years continuous employment.
Employees who reach 7 years continuous employment accrue a pro rata long service leave entitlement if:
- they reach the age for retirement, which is defined in the Act as 65 years for men and 60 years for women. It might be thought that this is an arbitrary and potentially discriminatory distinction.
- their employment is terminated (including by resignation) on account of illness or incapacity of such a nature to justify that termination.
- the employee resigns on account of incapacity or domestic or other pressing necessity of such a nature as to justify that termination.
- the employee is dismissed by the employer, for any reason other than serious and wilful misconduct.
“Continuous employment” is the key
Two key things to bear in mind about “continuous employment” are:
- it can apply to casual employees, provided they are regularly employed for at least 32 hours in each consecutive period of 4 weeks over the 10 year period.
- it is not necessarily broken where, as a result of a sale and purchase of a business, employees ‘stay on’ in the business.
When is long service leave to be taken?
The LSL Act says that “leave is to be granted as soon as practicable after the employee becomes entitled to it, having regard to the needs of the employer’s establishment, but … the taking of the leave may be postponed to such a date as is agreed…”.
In practice, most employers and employees agree that the leave can be taken at a time agreed between themselves.
Employees can take long service leave either in one or two periods.
Payment for long service leave
Long service leave must be paid at the rate that the employee could reasonably expect to receive at the time the leave is taken.
This can sometimes result in strange outcomes – an employee who was a ‘part time’ employee for the majority of their career, but who is nonetheless ‘full time’ at the time that long service falls due, will (all else being equal) get their leave paid at the full time rate.
This can also work the other way – someone who has been full time, but is part time at the time leave is taken will, be paid at the part time rate; subject of course to what the contract says.
To paraphrase President Barclay of the Tasmanian Industrial Commission in the decision of Cohen v Northern Children’s Network, if this seems to be an unfair outcome, then it is something that parliament needs to address.
What if there is a dispute?
Disputes can arise regarding the existence of the entitlement or the relevant rate of pay to be applied.
In such cases, the Secretary of the Department of Justice can be asked to investigate, or an application to the Tasmanian Industrial Commission can be made. Decisions can be appealed to the Full Bench of the Tasmanian Industrial Commission, whose decision is said to be “final” in respect of such disputes.
Queries
If you have any queries about long service leave, please contact Joe or Emily.
| Joe Mullavey Principal M: 0416 794 061 E: jmullavey@pageseager.com.au |
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| Emily Creak Principal M: 0400 955 183 E: ecreak@pageseager.com.au |
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Published: 23 July 2024
