How is long service leave changing?
Upcoming changes to the Long Service Leave Act will impact how this is calculated for your staff. We guide you through it.
The Industrial Relations Legislation Amendment Bill 2021, passed by the WA Parliament at the end of 2021, will introduce significant amendments to the Long Service Leave Act 1958 WA (LSL Act).
These amendments will impact the majority of businesses in WA and will take effect once Bill has been proclaimed, which is expected to occur in the next few months. A summary of the key changes is outlined below:
The definition of employee will be amended to include casual and seasonal employees. Casual employees are already entitled to long service leave under current provisions, however the inclusion of seasonal employees may result in employees who are engaged on separate seasonal contracts now having access to long service leave.
Contracting out long service leave
The Bill introduces two new restrictions to the provisions relating to contracting out of long service leave for an adequate benefit in lieu (e.g. cashing out). Under the new provisions, an agreement to contract out long service leave can only be made once the employee has accrued the entitlement — i.e. no earlier than 10 years of continuous service.
The amendments also include a provision that the adequate benefit in lieu must be paid at no less than the amount the employee would have been paid had they taken the leave. This ensures that employees won't be worse off by cashing out long service leave.
The LSL Act will also confirm that an employee can cash out either all or part of their entitlement.
Requests to cash out long service leave need to be in writing and signed by you and the employee, with employers required to keep a copy of the written agreement.
What constitutes service?
The definition of continuous service will be amended to clarify the types of absences that count towards the calculation of service.
Additionally, the LSL Act will include a provision confirming that casual or seasonal employees will have continuous employment irrespective of any absences from work that arise from the terms of employment, seasonal factors, and absences where the employee has a reasonable expectation of continuing work.
Transfer of business
The LSL Act currently states that an employee’s continuous service will continue if there is a transmission of business. This will be replaced with the transfer of business provisions within the Fair Work Act 2009 (FW Act). This provides a broader scope of where an employee’s service will transfer across, including insourcing and outsourcing arrangements, as well as employees working for other related companies.
Provide greater flexibility in taking leave
The amendments will allow more flexibility when accessing long service leave, including taking shorter periods by agreement by both employer and employee, taking twice the amount of leave at half pay and talking half the amount of leave at double pay.
The Bill introduces additional amendments, including to:
- Casual and seasonal employees’ ordinary pay
- Payment for employees paid by results
- Employment records
The amendments outlined above won’t take effect until the Bill has been proclaimed, which is expected to occur in the coming months.