Long service leave (‘LSL’) is a leave entitlement that applies to all employees, including casual staff, who get access to the leave after working for their employer for a significant period of time (the exact period varies between states and territories).

Usually, LSL will allow employees to take a lengthy time off from work in recognition of their years of service to the business (usually around 2 months leave after ten years’ service). This means at times it may be difficult for a business to be prepared operationally for this prolonged period of absence from an employee.  This often leads employers to ask: what is the process for employees taking LSL and in what circumstances can a request for leave be declined?

Understanding long service leave

The National Employment Standards (NES), as outlined in the Fair Work Act 2009, establish the foundation for long service leave entitlements for employees in Australia. This cross-refers to long service leave entitlements in each state and territory. These provide long-term employees with additional paid leave, distinct from annual leave, as a reward for their continuous service with their employer, with the ability to take the leave usually ranging from seven to ten years of service.

Different eligibility rules across states and territories

In most Australian states and territories, casual, part-time, and full-time employees become eligible for long service leave after ten years of continuous employment with the same employer. States and territories such as Victoria and ACT require a minimum of seven years of service for entitlement. These eligibility criteria are primarily determined by the respective state or territory’s long service leave legislation. 

Long service leave entitlements are typically governed by state or territory laws rather than modern awards or workplace agreements. Exceptions may arise if there are long service leave entitlements specified in a federal pre-modern award that would have applied to an employee before January 1, 2010. In such cases, the entitlements from the pre-modern award take precedence. Additionally, more generous long service leave schemes established in employment contracts, policies, or enterprise agreements can complement an employee’s minimum entitlement.

What are the typical long service leave rules in each piece of legislation?

All long service leave legislation typically contains the following rules:

 

  • Qualification Period: The legislation specifies how long an employee must work continuously to qualify for long service leave. Typically, this period ranges from 7 to 15 years, depending on the jurisdiction.

 

  • Leave Duration: The leave duration, which determines how long an employee can take for long service leave once they qualify, varies by state. Here are some examples:
    • In New South Wales (NSW) and Queensland (QLD), it’s typically 8.7 weeks (after 10 years’ service).
    • Victoria allows approximately 6.0667 weeks (after 7 years’ service).
    • In South Australia, it’s usually 13 weeks (after 10 years’ service).
  • The amount that can be taken: The rules about how much long service leave (LSL) an employee can take vary by state. In New South Wales (NSW), employees can either take their LSL all at once or (if the employer agrees) split it into two separate periods, depending on how much they are owed. Victoria is unique because it allows employees to take their LSL at half pay for twice as long. In Queensland (QLD), employees have the flexibility to take as little as one day of LSL at a time, if the employer agrees.
  • Accrual During Leave: In most cases, employees continue to accrue long service leave while they are on leave. They also will continue to accrue annual leave and personal/carer’s leave.

Can I direct employees to take long service leave?

Long service leave is typically meant to be taken as soon as an employee qualifies for it. However, there are cases where employers and employees can agree to delay it if the long service leave jurisdiction allows for such flexibility. If an agreement can’t be reached, the employer might have the authority to direct the employee to take their long service leave.

For example, in Victoria, an employer can direct an employee to take long service leave with 12 weeks’ notice. In New South Wales (NSW), the employer can give 1 month’s notice after the employee becomes entitled to long service leave. In Queensland (QLD), an employer can provide 3 months’ notice once the employee has become entitled to long service leave and the employee must take at least 4 weeks LSL.

Can I refuse a request from an employee to take long service leave?

Employers typically can only refuse long service on reasonable business grounds. These grounds may include:

  • An employer may reasonably decline long service leave if there is no practical way to adjust the working schedules of other employees to compensate for the absence of the employee intending to take long service leave. This might occur in situations where redistributing tasks among existing staff is not feasible or would impose undue hardship on other team members.
  • If altering the work arrangements of other employees to accommodate the long-service leave-taking employee’s absence is not feasible due to operational constraints, the employer may have grounds to refuse or defer the leave request. This can happen in industries or roles with stringent staffing requirements or specialised skills.
  • When it’s impractical to hire new workers to cover for the employee on long service leave.
  • A business may justify denying long service leave if it anticipates a substantial loss in productivity, efficiency, or output as a result of the employee’s absence. This might be the case in roles where the employee plays a critical role in ongoing projects or operations.
  • When the absence would significantly affect the business’s ability to provide satisfactory customer service.

If any of the above reasons apply, the business must substantiate its decision to decline the employee’s long service leave request with substantial evidence.

In cases where valid grounds exist, the business is then obligated to engage in consultation with the employee to establish a suitable date for the leave, as soon as reasonably practicable.

Can long service leave be cashed out?

Again, regulations regarding cashing out long service leave (LSL) vary from state to state. In states such as Victoria, South Australia, and New South Wales, the general policy is that LSL cannot be cashed out. However, in Queensland, the possibility of cashing out LSL exists, but it comes with conditions. Specifically, LSL can only be cashed out if it is expressly allowed by an industrial award, employment agreement, or receives approval from the relevant commissioner. Meanwhile, in the Australian Capital Territory (ACT), cashing out LSL is an option, but only if both the employer and employee mutually agree to this arrangement.

Conclusion

Long service leave is a valuable entitlement for employees in Australia, reflecting their commitment to their employers over the years. While employers have the right to refuse a long service leave request on reasonable business grounds, these grounds must be carefully considered and adhere to state or territory legislation. If you have any concerns about refusing long service leave, you can reach out to the EI team to assist with assessing reasonable grounds for refusal and what your obligations are.

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.

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