Taking long service leave

After at least seven years’ continuous employment with one employer, an employee is entitled to:

  1. take their accrued long service leave
  2. be paid out any accrued but unused long service leave if their employment ends.

Example

Jenny has worked at a chemist for eight years and six weeks.

Jenny wants to renovate her house but doesn’t have the time. A friend of Jenny tells her she might be entitled to take long service leave because she has more than seven years’ employment at the chemist.

Jenny asks her employer if she is entitled to take long service leave. Jenny’s employer calculates the amount of long service leave she can take as follows:

8 years multiplied by 52 weeks = 416 weeks.

416 weeks + 6 weeks = 422 weeks.

422 weeks divided by 60 = 7 weeks.

Jenny is entitled to take up to seven weeks’ long service leave to renovate her house.

Requesting long service leave

An employee can request to take long service leave at any time after becoming entitled to take the leave. Leave can be taken for any period of not less than one day at a time.

If an employee makes a request to take long service leave, the employer must grant the leave as soon as practicable unless the employer has reasonable business grounds for refusing the request. The ‘Definitions’ in section 3 of the Act provide some guidance on what is included in the meaning of ‘reasonable business grounds’.

Example

Rui is nearing retirement and has never taken long service leave. As a result, he has 26 weeks’ accrued long service leave.

Rui could wait until he retires and receive a payment for the accrued long service leave, but he would like to ease into retirement by working a four-day week for 12 months. His employer likes this idea, as it will reduce the long service leave payment to Rui when he reaches retirement. They agree to make this arrangement.

The Act allows leave to be taken in one-day periods. In this example, Rui can work a four-day week for the last year of his employment, without loss of pay or reduction in superannuation if he takes one day of long service leave each week. The balance of his leave will then be paid out once his employment ends.

Can long service leave be taken in advance?

Yes. An employer may agree to an employee taking long service leave before the employee becomes entitled to the leave. However, there is no requirement for an employer to agree to this. If the employment then ends before the employee accrues that long service leave, the employer may deduct from any monies payable to the employee as a result of the termination, an amount equal to the amount paid to the employee for the long service leave taken in advance.

Can an employer direct an employee to take long service leave?

Yes. An employer may direct an employee to take long service leave by giving at least 12 weeks’ written notice. If the employee does not want to take their leave as directed by the employer, they can apply to the Industrial Division of the Magistrates’ Court for an order that they are not required to do so.

Can an employee take leave at half pay?

Yes. An employer may agree to an employee taking a period of long service leave at half pay. For example, an employee with 13 weeks’ accrued long service leave could take 26 weeks’ long service leave at half pay. An employer must grant the request unless they have reasonable business grounds for refusing the request.

Note that taking half the leave at double pay is not permitted, as this is in breach of the Act’s prohibition on ‘cashing out’ long service leave.

The online calculator can assist with checking when an employee becomes entitled to take long service leave, and the amount of long service leave that an employee has accrued.

What if employment ends before all leave is taken?

Resignation, redundancy, termination, death

On the day that employment ends, an employee with at least seven years’ continuous employment with one employer is deemed to have started to take long service leave on that day, and is entitled to receive payment for the full amount of their accrued but untaken long service leave entitlement. This will apply whether the employee has resigned, has had their employment terminated by the employer, has been made redundant, or has died. In the event of death, payment must be made to the employee’s personal representative. Where employment ends before the employee has completed seven years’ continuous employment with one employer, the employee is not entitled to any payment in respect of long service leave.

It is an offence for an employer not to pay an employee the full amount of the employee’s accrued but unused long service leave entitlement on the day the employment ends. The penalty for this offence is 12 penalty units for a natural person and 60 penalty units for a body corporate. These penalties apply for each day that the offence continues. If an employer is found guilty of this offence, a criminal conviction may also be recorded.

It is important to note that, in most circumstances, payment in lieu of long service leave is prohibited (where employment is ongoing), as this is in breach of the Act’s prohibition against ‘cashing out’ long service leave.

Example one

Jacqui resigns from her employment and, following completion of her notice period, her employment ends after seven years and six months’ continuous employment. Jacqui’s long service leave entitlement is calculated as follows:

Seven years multiplied by 52 weeks = 364 weeks. Six months = 26 weeks.

364 weeks plus 26 weeks = 390 weeks in total.

We then divide the total weeks by 60, as Jacqui will receive one week of long service leave for each 60 weeks’ continuous employment. 390 weeks divided by 60 equals 6.5 weeks.

Jacqui is therefore entitled to payment in respect of 6.5 weeks of long service leave on the day her employment ends.

Example two

Marcus resigns from his employment, offering one month’s notice, but his employer elects to pay him in lieu of notice so that his employment ends on the day on which he resigns. Marcus’ employment ends after six years and eleven months. As Marcus has not reached seven years’ continuous employment by the last day of his employment, he has no entitlement to a payment in respect of accrued long service leave. If, however, Marcus had worked out his period of notice, he would have completed seven years’ continuous employment, and would therefore have been entitled to a payment in respect of long service leave once his employment ended.

Example three

Jayne is retiring after 22 years. After eight years of employment, Jayne took six weeks of long service leave to visit her daughter in Canada. Jayne’s long service leave is calculated as follows:

22 years multiplied by 52 weeks = 1,144 weeks in total.

We then divide 1,144 weeks by 60. 1,144 divided by 60 = 19.1 weeks.

We then deduct the 6 weeks’ long service leave already taken to calculate Jayne’s final entitlement. 19.1 minus 6 = 13.1 weeks.

Jayne is entitled to a payment in respect of 13.1 weeks of long service leave on the day her employment ends.

Can long service leave be ‘cashed out’?

No. In most circumstances, it is an offence under the Act to give or receive payment for long service leave instead of the employee taking the break from work. Both an employee and an employer can be liable for this offence. If an employee or employer is found guilty of this offence, a criminal conviction may be recorded.

An employee can only receive payment in respect of any unused long service leave if their employment ends before the leave is taken, or as otherwise provided for in certain fair work instruments.

Can an employee on long service leave be employed during the period of long service leave?

It is an offence to work while on long service leave or to employ someone who is on long service leave.

However, where an employee has more than one job (for example, two part-time jobs), the situation may differ. If an employee takes long service leave from one of their part-time jobs (Job A), they may continue to work in the other part time job (Job B). This is because the restriction on working while on long service leave only applies in relation to those hours during which the employee is taking long service leave. So while on long service leave from Job A, the employee must not work at Job B during the hours they would normally work at Job A.

Example

Cam has two part-time jobs, one at a local newsagent with Local Newsagent Pty Ltd, and one as a bar attendant with Local Hotel Pty Ltd. He works with Local Newsagent Pty Ltd on Mondays, Tuesdays and Wednesdays, and with Local Hotel Pty Ltd on Fridays and Saturdays.

Cam is presently taking long service leave from his work with Local Newsagent Pty Ltd.

While on long service leave from his work with Local Newsagent Pty Ltd, Cam can continue working for Local Hotel Pty Ltd on Fridays and Saturdays.

However, Cam cannot work for Local Hotel Pty Ltd on Mondays, Tuesdays or Wednesdays. This is because that is when he would normally work for Local Newsagent Pty Ltd, which is currently paying him long service leave so that he can take a break from work in relation to those hours.

Can an employee claim long service leave entitlements if the company is liquidated?

If a company is liquidated, it is essential to contact the liquidator urgently to make an application to the liquidator to be paid from the available assets as a creditor of the business.
If the assets are insufficient to meet an employee’s long service leave entitlement, the Fair Entitlements Guarantee scheme may be available.

The Fair Entitlements Guarantee (FEG) is a federal government scheme which provides for the payment of certain entitlements of eligible employees whose employment has been terminated because of their employer’s liquidation or bankruptcy. Eligible FEG claimants may be entitled to a FEG advance, subject to certain caps, for unpaid wages, annual leave, long service leave, payment in lieu of notice and redundancy pay if applicable.

Contact the FEG for full details of the scheme on 1300 135 040 or visit the FEG website.

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