Long service leave - What do employees get paid for long service leave?

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This page outlines how to calculate what employees get paid for a period of long service leave, or payment for long service leave when employment ceases, under the WA Long Service Leave Act.

Visit the main Long Service Leave page for links to other information on long service leave in Western Australia including who is covered by the WA Long Service Leave Act.

Payment for long service leave

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.

What is ‘ordinary pay’?

The ordinary time rate of pay:

  • is the rate of pay that applies to the employee when they take a period of long service leave or when they are terminated
  • does not include shift premiums, overtime rates, penalty rates or allowances (except for casual loading)
  • does include the cash value of any board or lodging provided to the employee.

Ordinary pay for a casual employee includes their casual loading.

Ordinary pay for an employee paid by piece rates or commission

Ordinary pay for an employee who is employed on piece rates, commission or any system of payment by results is the average rate earned by the employee during the previous 365 days ending on:

  • the day immediately before the day on which the employee commences long service leave; or
  • the day immediately before the day on which the employee and the employer reach agreement in relation to payment instead of long service leave; or
  • the day immediately before the day on which the employee was last in employment, if the employee is no longer in employment.

Any periods of unpaid leave and stand down are excluded from the 365 day period.  This ensures that employees are not disadvantaged if, for example, they have taken a period of unpaid leave, such as unpaid parental leave. However, any periods of paid leave are included in the calculation.

An employee who is paid a base rate and a commission/bonus is entitled to both the ordinary time rate of pay for the base rate and the average rate of the commission/bonus earned during the previous 365 day period.

In order to calculate the entitlement, keeping employment records is very important.

Example

Alex is paid wholly by commission. She took six months’ unpaid parental leave from 1 April to 30 September 2022 and wants to take long service leave from 1 January 2023. Her ordinary pay for this period of leave is calculated over a period totalling 365 days ending on the day immediately before the day on which her leave commences (i.e. 31 December 2022).

Calculating Alex’s ordinary pay requires averaging the commission she earned in the 273 days prior to the commencement of leave on 1 April 2022 and in the 92 days from when she returned to work on 1 October 2022 to 31 December 2023. The period from 1 April to 30 September 2022 when Alex was on unpaid leave is therefore excluded from the averaging.

Normal weekly number of hours

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 each accrual period. If the hours worked by the employee over each accrual period is 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 employment. For more information, visit the Long service leave – casual and seasonal employees page.

Absences which are not counted when calculating the length of an employee’s continuous employment (for example, a period of unpaid leave) are not included when averaging the employee’s hours.

Example

Ezra took 12 months of unpaid parental leave during a period of continuous employment. This 12-month period does not count towards the length of Ezra’s continuous employment. If Ezra’s hours require averaging over his period of employment, the averaging will not include this 12 month period during which Ezra was on unpaid leave and worked no hours.

Payment in advance for long service leave

An employer is required to provide payment in advance for a period of long service leave if the employee requests pay in advance in writing before the period of leave commences.

Information on cashing out long service leave is on the Cashing out long service leave page

Superannuation and taxation

Visit the Australian Taxation Office website for information on tax and superannuation.

 

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