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 their employment ends;
• does not include shift premiums, overtime rates, penalty rates or allowances (except for casual loading); and
• 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 weekly 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 and payment, keeping employment records is very important.

Example 1 - Calculating ordinary pay

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 2022. The period from 1 April to 30 September 2022 when Alex was on unpaid leave is therefore excluded from the averaging.

Example 2 - Calculating payment on termination

Harley has resigned after working for the business for 8 years. Harley’s employer has used the WA long service leave calculator to determine Harley’s pro rata long service leave entitlement is 6.94 weeks.  Harley is paid a base rate and a bonus/commission. Harley’s ordinary pay for this period is calculated over a period totalling 365 days ending on the day immediately before Harley’s last day of employment.

To calculate Harley’s average weekly earnings, Harley’s employer calculates the total amount earnt by Harley over the previous 365 days ($100,000) and divides this amount by 365 and then multiplies this by 7 (e.g. $100,000 / 365 * 7 = $1,917.81).

To calculate Harley’s pro rata long service leave payment on termination, Harley’s employer multiplies Harley’s average weekly earnings by Harley’s pro rata long service leave entitlement (e.g. $1,917.81 * 6.94 weeks = $13,309.60).

If an employee’s normal weekly number of hours of work have varied during their employment, the normal weekly number of hours is the average weekly hours worked by the employee during that accrual period. 

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. 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.

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

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