From 1 November 2018 the new Long Service Leave legislation will come in to effect in Victoria.

The fundamental that Long Service Leave starts accruing after 7 years of continuous service still remains, however much more flexibility has been given in both the way that the leave accrues and also how it’s taken.

From 1 November:

  • Long Service Leave can be taken in increments as little as one day at a time rather than in 2–3 larger blocks.
  • Leave can be taken from 7 years of service (instead of 10).
  • Unpaid parental leave of up to 12 months will count as service.
    (e.g Jane works for a company for 5 years, takes 1 year off unpaid to take care of a child, then returns to work for a year. The total period of service would be 7 years and Jane would be eligible for Long Service Leave.) 
  • Longer periods of unpaid long service leave will not break the continuity of service.
    (e.g Jane works for a company for 5 years, takes 3 years off unpaid to take care of a child, then returns to work. At the point of returning to work Jane’s initial 5 years and the 1st year of unpaid parental leave will count as service, so Jane will only be required to work an additional year before Long Service Leave kicks in.)
  • Casual employees continuity of service will break after 3 months of not working, however will be entitled to take up to 2 years of unpaid parental leave without breaking the continuity of service.
  • The LSL Act will broaden the definition of assets to include intangible assets (such as goodwill) for the purposes of working out whether continuity of service continues when an employer is bought out.
  • The calculation of LSL entitlements will now be calculated on the greater of the average hours worked in the last 12 months, 5 years or entire period of service.
  • Larger penalties both criminal and civil will apply to employers who breach these new regulations.

Where to from here?

  • Our recommendation is to have your employment contracts reviewed to ensure they remain compliant with the changes of legislation.
  • Whilst the changes are a big win for employees, employers need to ensure that they are keeping and retaining adequate records of employee hours to ensure that entitlements can be calculated correctly.
  • Ensure adequate funds are put aside to ensure cashflow isn’t adversly impacted if employees decide to take leave.