Long service leave: What are your obligations?

When it comes to managing Long Service Leave (LSL) for employees in WA, there is some flexibility in the way the entitlement can be accessed and managed.

Evolving from our colonial history, LSL was introduced to allow workers to sail home to the United Kingdom, spend time with their family and friends and then sail back to Australia for work.

It’s for this reason Australia is one of only two countries where there is a legislated right to LSL.

Here we explore some frequently asked questions relating to the Long Service Leave Act 1958 (WA) (the Act).

My employee wants to cash out some of their LSL entitlement, can they do this?

An employer and employee may agree to cash out some or all of the LSL entitlement, provided the agreement is in writing and the employee is provided with an equivalent benefit in lieu.

My employee is wanting to take some of their LSL in advance, do we have to approve this?

The Act provides a mechanism for employers and employees to agree to the taking of LSL in advance of the entitlement coming due. Where the employment terminates before the employee has served sufficient time with their employer to cover the LSL taken in advance, the Act allows for the deduction of the difference from ‘any remuneration payable upon termination’.

It is important to note that while the Act does allow for this, national system employers are also bound by provisions relating to deductions contained in the Fair Work Act 2009 (Cth) which may impact on the ability to withhold in this circumstance.

Can I direct my employee to take some of their LSL entitlement? They have over 20 years LSL accrued, and it is a large financial liability for the business.

You cannot direct an employee to take any of their LSL entitlement under the Act, regardless of how much accrued LSL the employee has, without the employee’s agreement.

However, it is possible to freeze the rate LSL is paid at as it stands at the time the LSL entitlement comes due, to reduce this liability.

This can be achieved via mutual agreement between the employer and employee that the taking of the leave be delayed to suit the employee. It is advisable to document any such arrangement in writing.

My employee has requested to take their LSL in two weeks’ time, can I refuse their request?

Generally, the timing and length of LSL will be mutually agreed between the parties. However, where agreement cannot be reached, the Act prevents employers from refusing employee requests to take LSL at a time suitable to the employee.

This is limited to where the employee’s entitlement came due at least 12 months prior to the time the employee intends on proceeding on that leave. In such instances, the employee is required to provide at least two weeks notification to their employer about their intention to take the leave.

As such, when LSL comes due it is advisable to discuss with the employee their intentions regarding the taking of their leave as soon as reasonably practical and to try and come to a mutually beneficial arrangement as this allows for better planning from an operational perspective, particularly with respect to covering work during the leave period(s).

If my employee goes on unpaid parental leave, will this affect their entitlement to LSL in the future?

An employee becomes entitled to take LSL, under the Act, after a period of 10 years continuous employment with the same employer. However, authorised unpaid leave, such as unpaid parental leave, will not count as continuous employment, but it will not break an employee’s employment.

For example, if the employee takes 12 months of unpaid parental leave before completing 10 years continuous employment, the employee will have to work an additional 12 months before the entitlement to LSL becomes due.

Do I need to pay out LSL if an employee resigns or is terminated?

If an employee resigns or is terminated and has completed at least 7 years but less than 10 years continuous employment, they will be entitled to a pro-rata amount of LSL based on the number of years, months and days of continuous employment completed.

An employee who has completed more than 10 years continuous employment will be entitled to receive a pro-rata amount of LSL based on fully completed years of employment. For example, if an employee has completed 12 years and 3 months of continuous employment, on termination of employment they will be entitled to LSL on 12 years continuous employment, excluding the 3 months as it does not constitute a completed year of employment.

What if I terminate the employee for serious misconduct?

If an employee is terminated for serious misconduct, no pro-rata LSL is payable.

CCIWA’s Guide to Understanding Long Service Leave in Western Australia contains extensive information about LSL entitlements including an overview of the legislation, relevant case law, a number of template letters and a pro-forma LSL policy to assist employers in managing the entitlement.

► Like to know more? For more information contact CCIWA’s Employee Relations Advice Centre on (08) 9365 7660 or email [email protected].

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