The Victorian State Government's proposed changes to the Long Service Leave Act 1992
(LSL Act) were passed by Parliament in May 2005. The amendments come into operation on 1 January 2006
. In this article, we review some of the key amendments and their implications for employers. Overview
Long service leave still accrues at a rate of 0.86 weeks per year of service. However, the applicable time periods for the accrual of rights to long service leave have been changed. There have also been a number of other significant changes, for example to the definition of 'employee' and 'continuous service'. We set out the major changes below - these changes should be read in conjunction with the remaining provisions of the LSL Act.Long service leave after 10 years
Employees will be entitled to take an initial period of long service leave of 8.6 weeks after 10 years of continuous employment with the same employer.
There is a phasing in arrangement in regard to this entitlement in terms of which only 2/3rds of the employee's continuous employment completed before 1 January 2006 will count as continuous employment.Long service leave if terminated after 7 years
Access to pro rata long service leave payments will be available to employees upon termination of employment after 7 years of continuous employment
Furthermore, this entitlement will no longer be forfeited in the event of dismissal for serious and wilful misconduct.Definition of 'employee'
The definition has been extended to specifically include apprentices and casual or seasonal employees.Meaning of 'continuous employment'
Continuity of employment will no longer be affected by:
Continuous employment for casual and seasonal employees
- absences approved by the employer, including carer's leave; and
- any period of adoption, maternity or paternity leave not exceeding 12 months (or any longer period as may be agreed).
Employment will be regarded as continuous if:
- there is no more than an absence of 3 months between each instance of employment; or
- there is an absence of more than 3 months but the length of the absence is due to the terms of the engagement of the employee by the employer.
Employment will be regarded as continuous if the absences between instances of employment are due to the seasonal nature of the employee's employment.Public holidays
Long service leave will no longer include any public holiday occurring during the period when the long service leave is taken.Meaning of 'ordinary pay'
Ordinary pay is the pay an employee is entitled to receive at the time they take long service leave for working their normal weekly hours at their ordinary time rate of pay.
If there is no fixed ordinary time rate of pay for an employee, the ordinary time rate of pay will be taken to be the average weekly rate earned by the employee over the preceding 12 months or 5 years, whichever is the greater.
If there are no fixed normal weekly hours of work, the employee's normal weekly hours of work will be taken to be the greater of the average weekly number of hours worked by the employee in the preceding 12 months or 5 years, whichever is the greater. Leave at half pay
If an employee makes a request for long service leave which is twice as long as the amount to which the employee would otherwise be entitled at half the employee's ordinary pay, the employer will be required to grant this request if it is reasonable to do so having regard to the needs of the employee and the needs of the employer's business.Penalties
Penalties will be significantly increased, in most instances to 20 penalty units (i.e. $2,045).Conclusion
The State Government maintains that the amendments "are designed to make long service leave more accessible and not more expensive". However, the Opposition in voting against the bill, regarded the Minister's remarks as "mumbo jumbo", and claimed instead that the bill was "simply another impost on the cost of doing business in Victoria."
Whether the legislation is evidence, as claimed by the Opposition, that "this government dances to a tune that is composed in Lygon Street at the Trades Hall Council", or not, the new long service leave provisions will become a reality for employers as of 1 January 2006 and the sooner employers understand these changes and factor them into the cost of doing business, the better.
The last word on long service leave, however, may be said by the Federal Government. Long service leave is currently an allowable award matter. Many awards provide for more generous entitlements to long service leave than the current State statutory entitlements. The Federal Government intends to remove a number of allowable award matters, including long service leave. This leaves open the question as to what will happen to award covered employees who have accrued substantial long service leave entitlements - a question which was recently put to Minister Andrews. Although the Minister offered some assurances that accrued entitlements will not be affected, it remains to be seen. The long awaited draft legislation may provide the answers. Implications for employers
Long service leave is costly for employers. As a result of the changes to the LSL Act, these costs will increase as of 1 January 2006.
Employers are advised:
- to review their obligations under the LSL Act, including the amendments which will commence on 1 January 2006;
- to review their current long service leave arrangements, practices and/or policies; and
- in anticipation of the amendments, to work out a schedule of entitlements, including the applicable costs.
Where long service leave is regulated by an industrial instrument (eg award or certified agreement or Australian Workplace Agreement), employers are advised to review those entitlements and to be aware of the discussions concerning these issues at the federal level.Frances Anderson is a Senior Lawyer, Workplace Relations Group, with Moores Legal.Footnotes
 Legislative Council 18 May 2005, Speech by Minister for Finance
 Legislative Council 24 May 2005, remark by Hon. C.A Strong
 Legislative Council 24 May 2005, remark by Hon. W R Baxter
 Doorstop interview, Canberra, 11 August 2005