The What is continuous employment? page details what counts as continous employment, and explains the effect of absences and interruptions to employment.
An employee must be paid ‘ordinary pay’ for a period of long service leave or for untaken long service leave on termination of employment.
Ordinary pay is remuneration for an employee’s ‘normal weekly number of hours of work’ calculated on their ordinary time rate of pay.
The ordinary time rate of pay:
- is the rate of pay that applies to the employee when they take a period of leave or when they are terminated
- does not include shift premiums, overtime, penalty rates or allowances
- does include the cash value of any board or lodging provided to the employee.
What is ordinary pay for a casual employee?
Ordinary pay for a casual employee includes their casual loading.
What is ordinary pay for an employee paid on piece rates or commission?
Ordinary pay for an employee who is employed on pieces rates, commission or any system of payment by results is the average rate earned by the employee during the previous 12 months:
- ending on the day immediately preceding that on which the employee commences long service leave or would but for payment in lieu of long service leave have commenced long service leave; or
- ending on the day immediately preceding that on which the employee was last in employment, if the employee is no longer in employment.
In order to calculate the entitlement, keeping employment records is very important.
If a full time, part time or casual employee’s normal weekly number of hours of work have varied during their period of employment, their normal weekly number of hours is the average weekly number of hours worked by the employee during their period of employment. If the hours worked by the employee over their period of employment are not known, their hours are averaged on the basis of the hours that are known.
An employee’s normal weekly number of hours will include overtime hours if the employee regularly worked overtime during their period of employment.
Averaging the hours worked by a casual, seasonal or FIFO employee takes into account periods when their employer did not provide them with work in accordance with their terms of engagement.
- Long service leave must be granted and taken, subject to any agreement between the employer and employee, as soon as reasonably practicable after it becomes due.
- Leave is to be taken in one continuous period.
- However, an employer and employee may agree to the employee taking leave in separate periods of not less than one week.
- Where an employer and employee have not agreed on when the employee is to take leave, the employer cannot refuse the employee taking any period of leave to which they became entitled more than 12 months before. This leave can be taken at any time that is suitable to the employee. The employee must, however, given the employer at least 2 weeks’ notice of the period during which they intend taking leave.
- An employer and employee may agree to cash out an employee's long service leave once the employee has completed the necessary period of continuous employment and accrued the leave.
- A long service leave entitlement cannot be cashed out in advance of the employee having completed the necessary continuous employment (i.e. prior to the leave being accrued), either through a lump sum payment or a loaded up base rate of pay or commission payment.
- An agreement to cash out long service leave must be in writing.
- The employee must be given an adequate benefit for the leave they have cashed out.
An example –
Emma is currently saving hard for her wedding next year. She has worked 38 hours per week for her employer for 11 years. She asks her employer to cash out 4 weeks of the 8.667 weeks’ leave she has accrued. Emma’s employer Lorraine writes an agreement for both to sign, specifying that Emma will receive 4 weeks' pay in lieu of taking 4 weeks' long service leave. Lorraine pays Emma 4 weeks’ leave at 38 hours per week and according to her current ordinary rate of pay. Lorraine keeps a copy of this agreement with her time and wages records and in Emma’s employee file.
Yes, if the employee requests pay in advance in writing before the period of leave commences.
An employer cannot refuse the employee taking any period of long service leave to which the employee became entitled more than 12 months before.
An employee can make a request and if the employer agrees, can reach an agreement to take long service leave in advance. An employee who enters into this agreement is not entitled to additional long service leave until they have accrued back the amount they were given in advance.
If an employee leaves or if their services are terminated before they have accrued their long service leave the employer may deduct from their final pay the amount that represents payment for any period for which the employee has been granted long service leave in advance.
Employees accessing long service leave cannot engage in paid employment in substitution for any employment from which they are taking long service leave.
If an employee does work, this may result in the employee forfeiting their right to long service leave, enabling the employer to withhold any further leave payments and to reclaim any wages paid for the period of long service leave already taken.
Where an employee has two or more jobs and is accessing long service leave for one of those jobs, generally the employee may continue working in their other job or jobs while on long service leave, as this employment is not in substitution for the job for which they are taking long service leave.
Under the Long Service Leave Act it is compulsory for employers to keep employment records for all employees detailing:
- the employee's name
- date of birth if under 21 years of age
- the gross and net amount paid to the employee
- all leave taken, whether paid, partly paid or unpaid
- any other details necessary for the calculation of the payment for long service leave
The employer must also ensure that records relating to long service leave are kept during the period of employment and for seven years from the date employment ends.
Wageline's Record keeping templates include a long service leave record template.