Which Pay System Refers to Entitlements That Individuals Accrue From Continuous Employment

Frequently asked questions

• 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 or under some other workplace law.

  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
  • 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) that commence in 2019.

• After at least 7 years' continuous employment with one employer, an employee is entitled to:

  1. take their long service leave
  2. be paid any unused long service leave entitlement if employment ends.

  Example

  Jenny has worked at a chemist for 8 years and 6 weeks.

  Jenny wants to renovate her house but doesn't have the time. A friend of Jenny's tells her she might be entitled to take long service leave because she has more than 7 years' employment at the chemist.

  Jenny asks her employer if she is entitled to take long service leave. Jenny's employer calculates the amount of long service leave she can take as follows:

  1. 8 years multiplied by 52 weeks = 416 weeks.

  2. 416 weeks + 6 weeks = 422 weeks.

  3. 422 weeks divided by 60 = 7 weeks.

  Jenny is entitled to take up to 7 weeks' long service leave to renovate her house.

• 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.

  Independent contractors

  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 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.

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  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.

• Yes, casual and seasonal employees, and employees engaged for a specified term, are entitled to long service leave under the Act. Their employment must still be 'continuous' under the Act.

  The rules for casual and seasonal employees mean that employment will be deemed continuous providing there is no absence of more than 12 weeks between any two instances of employment. A casual or seasonal employee's employment will also remain continuous for long service leave purposes, despite an absence from work exceeding 12 weeks, if:

  • the employee and the employer so agree before the start of the absence; or
  • the absence is in accordance with the terms of the engagement; or
  • the absence is caused by seasonal factors; or
  • the employee has been employed by the employer on a regular and systematic basis and has a reasonable expectation of being re-engaged by the employer; or
  • the absence is due to the employee taking up to 104 weeks' paid or unpaid parental leave.

  Paid or unpaid absences of any duration because of illness or injury will also not break continuous employment. There is more detailed information about the impact of leave and absences on long service leave under the Act on page 25 of this guide.

  The casual hourly rate does not include an amount to cover long service leave. A casual hourly rate cannot be loaded to compensate for non-payment of long service leave. In most cases, it is also unlawful to cash out an employee's long service leave entitlement instead of allowing the employee to access the leave as a break from work, though some exceptions apply such as where the employment has ended.

  Fixed term employees

  The Act provides that where employment terminates because of the expiration of a specified term (known commonly as 'fixed term') of an employment contract, but the employee is re-employed within 12 weeks, employment will be deemed continuous for the purposes of long service leave.

  Example one – casual or seasonal employee and employer agree

  Paul is a casual zoology tutor at a Victorian university. He has been employed by the same university for 13 years.

  Paul and the university have an agreement that Paul does not teach between November and March, due to the university non-teaching period. Paul therefore has a four-month break from work each year. However, this is in accordance with his employment agreement and his employment is therefore deemed to be continuous.

  Paul is eligible for long service leave despite the absences of more than 12 weeks between instances of employment every year. This is because Paul and his employer have agreed that his employment continues despite the regular absences of more than 12 weeks.

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  Example two – seasonal employment

  Russell works on a seasonal basis at Ruth's Plant Nursery. Russell has worked at the nursery for eight years.

  Russell does not work in the coldest winter months when there is a dormant period for the plants. During his employment at Ruth's, these non-working periods have ranged from five weeks to a few months each year. On at least three occasions, the winter break has lasted for more than three months. However, Russell's regular work always recommences after the winter shutdown.

  Russell is eligible for long service leave because his absences are caused by seasonal factors.

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  Example three – regular and systematic casual employment

  Leo works as a casual employee at his local supermarket. He is regularly rostered to work Mondays in accordance with a rostering system established in consultation with his employer, and has done so for the last two years.

  Leo's mother unfortunately falls ill, and Leo must take four months off work. He tells his employer this, and his employer assures him they will make shifts available to him again once he is able to return. Leo then returns to work four months later when his mother is feeling better.

  Although there is no explicit agreement that his employment will not be broken for the purposes of long service leave, his service will be deemed continuous under the Act. This is because Leo's work is regular and systematic, and he has a reasonable expectation of being re-engaged following the absence.

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  Example four – casual or seasonal employee takes unpaid parental leave

  Ashanti works as a casual ski instructor during each Victorian ski season. Ashanti has worked every ski season for the past six years.

  Ashanti takes an initial period of 52 weeks' unpaid parental leave. Before the end of the initial 52 weeks' unpaid parental leave, Ashanti applies to extend her period of leave by a further 52 weeks – making a combined total of 104 weeks' unpaid parental leave. Ashanti returns to work at the start of the next ski season after her 104 weeks' unpaid parental leave.

  In this example, Ashanti's period of unpaid parental leave does not break her continuous employment for long service leave purposes under the Act. Additionally, any further period beyond 104 weeks' unpaid parental leave .that elapsed before Ashanti could return to work also won't break her continuous employment if the further absence was caused by seasonal factors.

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  Example five – fixed term employment

  Karina works at an accountant's business in the city. Karina has been employed at her job for eight years. Karina is currently employed on an ongoing basis, but for the first three years she was employed on a series of 12-month fixed-term contracts. Karina was re-employed at the end of each fixed-term contract. On the first two occasions, the new employment contract commenced immediately after the expiration of the previous fixed term. However, on the last occasion there was a break of four weeks between the expiration of Karina's third fixed-term contract and the commencement of her ongoing employment.

  Despite Karina being employed under a total of four separate employment contracts, the first three being fixed-term engagements, her entire period of employment under each successive period of employment, and any gap between them, is deemed continuous under the Act. This is because on each occasion Karina was re-employed within 12 weeks.

• Yes. An employer may agree to an employee taking long service leave before the employee becomes entitled to the leave. However, there is no requirement for an employer to agree to this.

  If the employment then ends before the employee accrues that long service leave, the employer may deduct from any monies payable to the employee as a result of the termination, an amount equal to the amount paid to the employee for the long service leave taken in advance.

• Yes. An employer may direct an employee to take long service leave by giving at least 12 weeks' written notice.

  If the employee does not want to take their leave as directed by the employer, they can apply to the Industrial Division of the Magistrates' Court for an order that they are not required to do so.

• Yes. An employer may agree to an employee taking a period of long service leave at half pay. For example, an employee with 13 weeks' accrued long service leave could take 26 weeks' long service leave at half pay.

  An employer must grant the request unless they have reasonable business grounds for refusing the request.

  Taking half the leave at double pay is not permitted.

• Resignation, redundancy, termination, death

  On the day that employment ends, an employee with at least 7 years' continuous employment with 1 employer is deemed to have started to take long service leave on that day, and is entitled to receive payment for the full amount of their accrued but untaken long service leave entitlement. This will apply whether the employee has resigned, has had their employment terminated by the employer, has been made redundant or has died.

  In the event of death, payment must be made to the employee's personal representative.

  Where employment ends before the employee has completed 7 years' continuous employment with one employer, the employee is not entitled to any payment in respect of long service leave.

  It is an offence for an employer not to pay an employee the full amount of the employee's accrued but unused long service leave entitlement on the day the employment ends. The penalty for this offence is 12 penalty units for a natural person and 60 penalty units for a body corporate. These penalties apply for each day that the offence continues. If an employer is found guilty of this offence, a criminal conviction may also be recorded.

  Example 1

  Jacqui resigns from her employment and, following completion of her notice period, her employment ends after seven years and six months' continuous employment. Jacqui's long service leave entitlement is calculated as follows:

  • 7 years multiplied by 52 weeks = 364 weeks. Six months = 26 weeks.
  • 364 weeks plus 26 weeks = 390 weeks in total.
  • We then divide the total weeks by 60, as Jacqui will receive one week of long service leave for each 60 weeks' continuous employment. 390 weeks divided by 60 equals 6.5 weeks.
  • Jacqui is therefore entitled to payment in respect of 6.5 weeks of long service leave on the day her employment ends.

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  Example 2

  Marcus resigns from his employment, offering one month's notice, but his employer elects to pay him in lieu of notice so that his employment ends on the day on which he resigns.

  Marcus's employment ends after 6 years and eleven months. As Marcus has not reached 7 years' continuous employment by the last day of his employment, he has no entitlement to a payment in respect of accrued long service leave.

  If, however, Marcus had worked out his period of notice, he would have completed 7 years' continuous employment and would have been entitled to a payment of long service leave once his employment ended.

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  Example 3

  Jayne is retiring after 22 years. After eight years of employment, Jayne took six weeks of long service leave to visit her daughter in Canada. Jayne's long service leave is calculated as follows:

  • 22 years multiplied by 52 weeks = 1,144 weeks in total.
  • We then divide 1,144 weeks by 60. 1,144 divided by 60 = 19.1 weeks.
  • We then deduct the 6 weeks' long service leave already taken to calculate Jayne's final entitlement. 19.1 minus 6 = 13.1 weeks.
  • Jayne is entitled to a payment in respect of 13.1 weeks of long service leave on the day her employment ends.

• No. In most circumstances, it is an offence to give or receive payment for long service leave instead of the employee taking the break from work.

  Both an employee and an employer can be liable for this offence and, if found guilty, a criminal conviction may be recorded.

  An employee can only receive payment in respect of any unused long service leave if their employment ends before the leave is taken, or as otherwise provided for in certain fair work instruments.

• If the ownership of a business employing an employee changes, but the employment of the employee continues, then the employee is taken to have started employment with the new owner on the date on which they started employment at that business.

  This means that where a business is sold, transferred or assigned and an employee remains with the business, the new employer becomes responsible for the employee's long service leave entitlement. The period of employment with the old employer effectively transfers to the new employer, who becomes liable for the employee's long service leave entitlement in respect of the employee's entire period of employment at that business.

  Similarly, if an employee is dismissed by the old business owner but is employed by the new business owner within 12 weeks after their dismissal to do work which is the same (or substantially the same) as the work the employee did for the old owner, employment is deemed continuous for the purposes of long service leave accrual.

  It is common for the sale of business documents to reflect this liability, but such documents cannot lawfully exclude an employee's entitlement. Even if the contract for the sale of business does not deal with a transferring employee's long service leave, the employee still has an entitlement that the new employer must recognise.

  It is also common for the parties to a sale of business to factor long service leave liabilities into the purchase price, or for an amount of money to be put into trust for the employee's benefit to cover the amount of long service leave the employee accrued during their employment with the old employer. However, any agreement between the seller and purchaser has no bearing on an employee's entitlement.

• If an employer re-employs a person who was formerly the employer's apprentice within 52 weeks after completion of the employee's apprenticeship, then the period of their apprenticeship counts towards the period of employment with that employer.

• For an employee to become entitled to long service leave, their employment with the employer must be continuous. However, some periods of leave and absences from work do not break continuous employment for long service leave purposes.

  How common absences affect continuous employment

  Common absences from work that count or do not count towards the period of continuous employment if they occur on and from 1 November 2018

  Does count towards the period of employment	Does not count towards the period of employment
  Paid leave	Unpaid leave exceeding 52 weeks unless the leave is provided for under the relevant employment contract or fair work instrument or is on account of illness or injury
  Unpaid leave (including unpaid parental leave) up to 52 weeks, or longer if the leave is provided for under the relevant employment contract or fair work instrument	Where an employee's employment ends, and the employee is re-employed within 12 weeks, the period during which the employee was not employed
  Leave on account of illness or injury

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  Common absences from work that count or do not count towards the period of continuous employment if they occurred before 1 November 2018

  Does count towards the period of employment	Does not count towards the period of employment
  The taking of any annual leave or long service leave	Unpaid parental leave
  Any other paid or unpaid absence from work approved by the employer, including personal/carer's leave but not including adoption, maternity or paternity leave	Where an employee is dismissed at the employer's initiative and the employee is re-employed within three months, the intervening period
  Any absence from work of not more than 48 weeks in any year on account of illness or injury	Any absence from work exceeding 48 weeks in any year on account of illness or injury

• No amount of paid or unpaid parental leave will break continuous employment for long service leave purposes.

  Unpaid parental leave up to 52 weeks will count towards accrual of Long Service Leave, and leave exceeding 52 weeks will also count if the employment contract or fair work instrument provides for this, or by agreement in writing between the employer and employee.

  The Act's transitional provisions mean that certain types of absence from work that occurred before 1 November 2018 will continue to not count towards the period of continuous employment for the purposes of long service leave purposes.

  If the Act commenced during an employee's absence on unpaid parental leave, only that part of the period of unpaid absence occurring on and from 1 November 2018 counts towards the employee's period of employment for the purposes of long service leave.

• Any paid or unpaid absence from work because of illness or injury occurring on and from the commencement of the Act on 1 November 2018 counts towards the period of continuous employment for long service leave purposes.

  Where the unpaid absence because of illness or injury occurred before the commencement of the Act, only 48 weeks' unpaid absence for that reason in any year counts towards the period of employment, as it occurred under the previous 1992 Act.

Reviewed 30 September 2022

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Source: https://www.vic.gov.au/long-service-leave

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