Long Service Leave

Presented by NSW Industrial Relations

Long Service Leave

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Topics Long Service Leave in NSW Long Service Leave Act 1955 Pro-Rata Long Service Leave Case Law and Examples Resolving Long Service Leave issues Useful Contacts and Links

Long Service Leave

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The Long Service Leave entitlement in NSW:

NES - award-derived long service leave entitlement Federal Awards and agreements which have a LSL entitlement

before 2010 If no award or agreement - NSW Long Service Leave Act 1955 Building and Construction Industry LSL Payment Act 1986* Contract Cleaning (Portable Long Service Leave Scheme) Act 2010

No 122* For additional information contact Long Service Corporation on 13 14 41

Long Service Leave Act 1955

Long Service Leave

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Long Service Leave Act 1955

Applies to most employees in New South Wales full time, part time and casual (9 May 1985)

Entitlement 2 months at 10 years of continuous service

1 month after each additional 5 years (at 15 years = 3 months)

Must be taken as soon as practical as leave or paid on termination of employment

Certain interruptions will not break service (parental leave)

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How is long service leave paid?

Rate of payment for workers remunerated by ordinary time rate of pay (eg, full time, part time with fixed hours) - Higher rate between:

Ordinary time rate of pay when commencing leave, or

Average weekly rate of pay earned during the previous 5 years

Shift allowances, penalty rates, overtime payments, fares, travelling time and other like payments not included.

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How is long service leave paid? (cont.)

Rate of payment where worker has no fixed normal weekly number of hours (eg, casuals) Calculation of normal weekly hours based on higher between: Average number of hours worked during previous 12 months, or Average number of hours worked during previous 5 years Paid at casual rate at time of going on the leave

Shift allowances, penalty rates, overtime payments, fares, travelling time and other like payments not included.

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How is long service leave paid? (cont.) Rate of payment for workers remunerated other than by ordinary

time rate of pay (eg, piece workers, commission only workers) - Higher rate between:

Average weekly rate of pay earned during the previous 12 months, or

Average weekly rate of pay earned during the previous 5 years

Shift allowances, penalty rates, overtime payments, fares, travelling time and other like payments not included.

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How is long service leave paid? (cont.)

Bonus and commission payments received by an employee are also included in long service leave pay These payments are calculated as follows:

Averaged over previous 12 months, or

5 years, if 5 year average pay rate is used

The amount is then added to weekly pay rate to calculate leave payment.

If an employee is currently paid in excess of $144,000 pa, bonuses are not included.

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Payment during leave may be either:

Paid in full on commencement of leave Paid at ordinary rate of pay at normal pay intervals, or In any other way agreed between the employer and employee If a public holiday occurs during leave and falls on a day the

employee would have ordinarily worked, an additional day is added to the leave

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Continuous Service:

To qualify for Long Service Leave there needs to be continuous service with an employer, whether permanent, casual, part-time or any other basis, including: Employee transferring within a company or group

Transfer of employment

Continuous Service is maintained if employer-approved absences take place, however, some absences are not counted as time worked, eg Parental Leave

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Continuous Service Interruptions that do not break continuity of service: Absence due to illness or injury, or under the terms of the workers

employment, will not break and will count as service Employer approved absences from work and Parental leave will

not break but does not count as service If caused by employer and employee returns to employment within 2

months - period of interruption does not count as service but does not break

No break in continuity where a transfer of business occurs

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Taking Long Service Leave:

No cashing in of Long service leave Must be taken as leave or paid on termination Long service leave must be granted and taken as soon as

practicable (once it becomes due) By agreement the leave may be postponed to another mutually

convenient date By agreement the rate of pay for postponed leave may be the rate

at the time the agreement to postpone was entered into

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Taking Long Service Leave:

Only able to access the ten year entitlement additional month available each five years thereafter

Employer can give an employee one months notice of the date to which their leave shall be given and taken

Long service leave can be taken in one continuous period, or if the employer and the employee agree: where the leave owing is two months in two separate periods where the leave owing is between two months and nineteen

and a half weeks - in three separate periods If leave exceeds 19 weeks can be taken in four separate periods

Pro-Rata Long Service Leave

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Pro-Rata Long Service Leave In the case of a worker who has completed at least 5 years service but less than 10 years service and whose service was terminated for reasons other than serious and wilful misconduct: a proportionate amount (pro rata) for each completed year,

month, week and day

The above also applies if worker leaves on account of: illness, incapacity or domestic or other pressing necessity, or Death of the worker

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Test applied by courts:

Was the reason claimed for termination one of the above Was such reason genuinely held by the employee Was the reason a real or motivating reason Would a reasonable person, in the circumstances be compelled to

terminate their employment

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Reasonable Evidence Claimant is required to provide evidence to enable the questions

posed to be answered to the affirmative In answering the questions, that the court could determine what the

true facts were at the relevant time, in light of what was said and done, and of the circumstances in which those things were said and done.

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Illness or Incapacity Did the illness or capacity necessitate the termination Was the evidence sufficient for a reasonable inference that had it

not been for the illness or incapacity that termination would not have occurred

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity The courts have deemed the test for the above is a subjective one This means that the court views each situation on its own merits

and facts. Each situation is considered different although the courts may refer to previous case law.

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Test Case Westbus Pty Ltd v Bartush (2000) NSWIRComm 26 Employee claimed loss of income, change in working conditions and the

inability to collect his children from school as domestic or pressing necessity

Commission found in favour of employer as family friend assisted in picking up children and employee unable to prove that the loss of income amounted to domestic or pressing necessity

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Test Case British Motor Corporation v Chance (1965) AR (NSW) 364 Employee was suffering a chronic mental disability that resulted in a

recurrent anxiety state NSW Chief Industrial Magistrate held the illness was the cause of the

workers termination Employer appealed this decision to a full bench of the NSW IRC which

upheld the original decision by Chief Industrial Magistrate that the worker was entitled to pro-rata long service leave payment

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Pro-Rata Long Service Leave Illness, incapacity or domestic or other pressing necessity Test Case Donnelly v South Maitland Railways Pty Ltd 1964 home duties given as the domestic circumstance, the pregnant

employee successfully arguing that this was a domestic or pressing necessity

Franks v Kembla Equipment Co. Pty Ltd 1969 Employee was required to leave work to care for sick wife and assist

with children

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Resolving a dispute for LSL Step 1 The employee should try and discuss the issue with the employer in

the fir