What is ‘Long Service Leave’?
Long Service Leave (LSL) is granted to employees for continuous service to an employer.
In NSW, this leave is regulated by the Long Service Leave Act.
Who is entitled?
Long Service Leave applies to full-time, part-time and casual employees who have completed ten years of service. Any employee who has ten years of service is entitled to two months (8.67 weeks) paid leave, to be paid at the ordinary gross weekly wage. Once an employee has completed fifteen 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.
This includes employees who are transferred between companies within the same group, or, if the business is sold and the employee continues to work for the new owner.
The Act also provides for a pro-rata payment. If an employee has completed five years (but less than ten years) of service they are entitled to a long service pro-rata payment if the employee:
resigns as a result of illness, incapacity, domestic or other pressing necessity
is dismissed for any reason except serious and wilful misconduct
An employee with less than five years of service has no entitlement to a pro rata amount.
Please note that any periods of unpaid leave such as unpaid parental leave do not form part of your ‘continuous service’ to your employer. Any periods of unpaid leave are deducted from your length of service.
How will it be calculated?
Long Service Leave pay is based on whichever is the highest rate:
- The employee’s current gross weekly wage for the last pay period prior to the leave being taken; or
- The average weekly ordinary rate of pay earned during the past five years.
Are overtime, shift rates, loadings or penalty rates included?
No, overtime, shift rates, loadings, penalty rates and allowances are excluded. For example, Sunday penalty rates are not included.
Bonus and commission payments however, may be included. These are averaged over the previous twelve months and added to the weekly rate used to calculate the leave payment.
When will it be paid?
When an employee begins LSL the employer will provide the payment in one of two ways:
- a lump sum when the employee starts the leave, or
- as part of the employee’s normal pay period.
Pay in lieu of taking leave is prohibited by the Act.
How can LSL be taken?
LSL can be taken in one continuous period, or if the employee and employer agree, in one of the following ways:
- where the leave owing is two months - in two separate periods,
- where the leave is more than 2 months and less than nineteen and one-half weeks – in two or three separate periods,
- where the leave is greater than nineteen and one-half weeks – in two, three or four separate periods.
LSL should be taken as soon as possible, taking into account the needs of the business. However, it can be postponed to a time that better suits both parties.
In any case, the employer must give an employee one month’s notice of the date of commencement of the LSL.
What happens if a public holiday falls during the LSL?
An extra day must be included in the LSL if it is a day the employee would have worked had they not been on long service leave.
How much do LSL do I have?
Long service leave is often recorded on payslips, however not all payslips show this amount. Your employer does however have an obligation to keep records of their employees’ long service details. You can ask your employer for what your long service leave balance is and you should always check that their calculations are correct.
In order to check your long service leave entitlements are correct you should firstly refer to your Enterprise Agreement. Some Enterprise Agreements may have more favourable terms than the standard terms set out by NSW law. If your Enterprise Agreement has more favourable terms then you are entitled to those. Alternatively, the minimum entitlements under the NSW Long Service Leave Act are set out in the table below: