Long service leave is a long-standing entitlement for Australian employees that varies by State and Territory.
The Long Service Leave Act 2018 sets out the arrangements for long service leave in Victoria. This guide explains the entitlements and obligations of employees and employers under the Act.
The Act applies from 1 November 2018 and replaces the Long Service Leave Act 1992 (Vic) (1992 Act).
The arrangements for long service leave in other States and Territories are different. Each State and Territory has its own laws that deal with long service leave.
Sometimes, an employee may have been continuously employed by the one employer for more than seven years, however part of their employment has been undertaken outside Victoria. In these circumstances, their employer may not be liable to pay long service leave if there is not a sufficient connection to that external employment and the State of Victoria. In order for there to be a sufficient connection, continuous employment must be employment ‘in and of Victoria’, which may include:
- employment performed wholly in Victoria,
- employment pursuant to a direction coming from Victoria, or
- employment offered and accepted in Victoria but where an employee is seconded to work in offices outside of Victoria.
Continuing effect of certain leave or absences taken under the 1992 Act
While the Act applies from 1 November 2018, employees remain eligible for long service leave accrued under the 1992 Act. The Act also has rules (called ‘transitional provisions’) that preserve the operation of certain provisions in the 1992 Act in relation to continuous employment, and to what counts towards an employee’s period of employment for long service leave purposes. These transitional provisions mean that certain types of leave or absences from work taken prior to 1 November 2018 continue to affect continuity of employment and accrual of long service leave in the same way as they did when the 1992 Act applied. This guide refers to these transitional provisions where relevant.
Who is covered by the Act?
Most Victorian employees are covered by and entitled to long service leave in accordance with the Act, unless they derive their long service leave entitlement from another source. In short, almost all Victorian workers will have a right to long service leave, but that right may be under the Act, an enterprise agreement, a pre-modern award (explained later in this guide) or under some other workplace law (known collectively as ‘industrial instruments’).
Definitions of employee and employer for the purposes of this Act are covered later in this guide.
Additionally, the Act does not apply to:
- employees who are entitled to long service leave under another Victorian Act, to the extent of any inconsistency; or
- workers covered by the Construction Industry Long Service Leave Act 1997 (Vic).
There are also specific arrangements for portable long service for some industries under the Long Service Benefits Portability Act 2018 (Vic), which commenced in 2019. If you work in the contract cleaning, security or community services industries, you may have a portable long service leave entitlement. More information about the Portable Long Service Leave Scheme can be found from the Portable Long Service Authority.
Who is an employee?
The Act provides 'employees’ with an entitlement to long service leave. An employee is defined by the Act to include a person employed by an employer to do any work for hire or reward. It includes an apprentice and any person, such as a trainee, whose oral or written contract of employment requires them to learn or be taught an occupation.
Full time, part time, casual and seasonal employees, and employees under certain fixed-term arrangements, all accrue long service leave.
An employee may have a more generous entitlement under a common law employment contract than under the Act. However, where a contract contains long service leave entitlements that are not more generous than those under the Act, then the Act will nonetheless apply. In addition, an employer cannot lawfully use a contract, agreement or deed of any kind to avoid their obligation to pay the full amount of long service leave owed to an employee. For further information, please contact the Wage Inspectorate on 1800 287 287.
Genuine independent contractors are not employees and are generally ineligible for long service leave under the Act. However, whether a person is truly an independent contractor or employee needs to be assessed on a case-by-case basis. You can seek assistance in assessing whether a person is a genuine independent contractor or an employee from the Fair Work Ombudsman.
Outworkers in the clothing industry are deemed, by the Outworkers (Improved Protection) Act 2003 (Vic), to be employees for the purposes of the Act and are therefore entitled to long service leave in accordance with the Act.
Example one
Janika is offered and accepts a job as a retail salesperson. On the day Janika starts at the business, she signs a contract of employment which has a clause stating she won’t be entitled to long service leave if her employment ends before she has completed ten years’ service.
Janika resigns from her employment after eight years and asks her employer to pay her seven weeks’ long service leave. However, her employer points out that she signed a contract which stated she was not entitled to long service leave if employment ends before she has completed ten years’ service.
Despite the wording of her contract of employment, Janika is entitled to payment in respect of seven weeks’ long service leave on the day her employment ends. This is because long service leave terms in a contract that provide for a lesser entitlement (i.e. less favourable) than under the Act, and which purport to annul or vary or exclude any provision of the Act, are invalid. In these circumstances, the Act will still apply, even if an employee signed the contract. In this example, Janika’s employer is obliged to pay Janika her long service leave entitlement and Janika can still enforce her legal right to recover non-payment.
Example two
Esther’s employment ends after ten years, and they have accrued 8.7 weeks of long service leave.
Esther and their employer become involved in a dispute over Esther’s long service leave entitlement, and they are offered a settlement by their employer equivalent to six weeks’ pay.
Despite any settlement agreement, based on a ten-year employment period, Esther remains entitled to payment in respect of the full 8.7 weeks of long service leave in accordance with the Act, and they retain the right to recover the underpayment even if they have signed the settlement agreement.
Interaction between state and federal long service leave laws: which law applies?
It is important for employees and employers to check if an employee’s employment is covered by another Act, or a pre-modern award or enterprise agreement, and whether that Act, award or agreement provides for an entitlement to long service leave.
You can seek help with this enquiry from the Fair Work Ombudsman.
Modern awards (governed by the FW Act) made from 1 January 2010 cannot include long service leave terms.
In some instances, an enterprise agreement may provide for long service leave entitlements that refer to and/or align with the Act. In others, they may be different from the entitlements under the Act. Importantly though, where an enterprise agreement or other fair work instrument provides for long service leave terms that are more favourable than those under the Act, an employee will be entitled to long service leave in accordance with the enterprise agreement, and the Act will not apply to the extent of any inconsistency. However, terms of a fair work instrument that are less favourable than the Act may be invalid, and the Act may apply instead.
It is important to know which industrial instrument provides an employee’s entitlement to long service leave, as this may affect the timing of when the leave becomes available, the rate of accrual, and whether a state or federal agency is responsible for ensuring compliance with that long service leave law.
The Long Service Leave Act and pre-modern awards
The FW Act preserves some old awards for the purposes of long service leave, which means that an employee may be entitled to long service leave under one of those awards instead of the Act. These ‘pre-modern’ awards are old awards that applied immediately before 1 January 2010. An employee may have an entitlement to long service leave under a pre-modern award if the employer is bound to the award, and it covers the work of the employee and entitles the employee to long service leave. These awards continue to apply in this way (subject to certain rules) in a range of industries, including to some employers in the automotive, horticultural and pastoral industries.
If the relevant award or enterprise agreement is silent on long service leave, the Act will usually apply by default.
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