Australia: Changes to long service leave in Victoria

The Long Service Leave Act 2018(Vic) (New Act) has received the Royal Assent and will commence on 1 November 2018 (or earlier). The New Act will replace the Long Service Leave Act 1992 (Vic) (Current Act).

Some of the key changes are outlined below.

When and how employees can take long service leave

Under the Current Act:

  • An employee does not have the legal right to take long service leave as actual leave during employment until they reach 10 years of continuous employment with the employer. The employer and employee can agree on leave being taken before it is actually due but the employee does not have a right to take leave before completing 10 years of continuous employment.
  • If an employee's employment is ended and the employee has completed at least 7 years of continuous employment with one employer then the employee is entitled to receive a pro-rata payment in lieu of their accrued but untaken long service leave.
  • Long service leave must be taken in one period unless the employer and employee agree. In that case, the first 13 weeks of long service leave may be taken in 2 or 3 separate periods. Any further entitlement may be taken in 2 separate periods.

Under the New Act:

  • Employees will be able to apply to take long service leave after 7 years of continuous employment with one employer, on a pro rata basis.
  • This brings the qualification for the taking of leave into line with the payment for leave when employment ends. This will not increase employee entitlements or employers' costs as the long service leave entitlement has already crystallised at 7 years.
  • Employees may request long service leave for a period of not less than one day. An employer must grant the employee's request to take long service leave as soon as practicable after receiving the request unless there are reasonable business grounds for refusing the request.

Transfer of business

Under the Current Act, if:

  • an employee performs duties in connection with assets used in carrying on a business; and
  • the employee's employer transfers assets to another employer who continues the employment of the employee;

the employee will be regarded as having been employed by the 'one employer'.

'Assets' are defined as including land, plant and equipment.

Under the New Act, the definition of 'asset' in a transfer of business situation includes intangible assets. These provisions have been modelled on section 311 of the Fair Work Act 2009 (Cth) for consistency and ease of understanding.

Calculating leave

  • The New Act includes a new method of calculating leave where an employee's hours of work are not fixed, so that the average of the hours worked will be calculated as the greater of the average over the last 12 months, 5 years, or the entire period that the employee has been continuously employed. This method of calculating entitlements is fairer for those employees who have taken leave or reduced their hours of work for personal reasons.
  • Similarly, the New Act also includes a new method of calculating leave where an employee's hours of work have changed, so that hours worked will be calculated as the greater of the average over the last 12 months, 5 years, or the entire period of employment. The averaging will apply to where a change in hours has occurred in the 24 months prior to the long service leave being accessed.

Continuity of employment

  • Under the Current Act, an employee will be regarded as having been continuously employed despite taking unpaid parental leave of up to 12 months but that absence from work will not count towards their period of continuous employment. An employee will not be regarded as "continuously employed" if an employee takes more than 12 months of unpaid parental leave even though they have the right to do so under the Fair Work Act.
  • Under the New Act, parental leave will be treated the same as other forms of paid leave. Paid leave does not break an employee's continuity of employment and will count towards the total period of continuous employment.
  • In relation to parental leave, the New Act provides that an employee is taken to be continuously employed even if they take unpaid parental leave for a period of up to 12 months (or longer if agreed by the parties). This period of absence will count towards their length of continuous employment and will not break their continuity of employment. Unless agreed by the employer and the employee before the leave commences, any absence that is greater than 12 months will not be taken into account in calculating the length of the period of continuous employment.
  • A casual or seasonal employee is taken to be continuously employed even if they take a period of paid or unpaid parental leave that is not longer than 24 months (or longer than 24 months if agreed).The Fair Work Act allows casual and seasonal employees to take up to 24 months unpaid parental leave.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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