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How Long Service Leave Works in Australia

As an overseas employer, you might be accustomed to offering different types of leave for your employees according to local employment laws.  If you are new to hiring in Australia, you should be aware of a special type of leave called long service leave.

You might think this wont apply to your company, but if an employee was part of a company that you acquired in Australia, you may be obligated for their long service leave.

Also, if you plan on having a long business presence of 7-10 years, or are bringing long term employees from subsidiaries abroad, then the long service leave will certainly need to be offered to them as well.

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What is long service leave?

As the name implies long service leave is offered to employees after lengthy, continuous employment, and is in addition to annual leave.  There are two main issues: the time period of employment to qualify, and the amount of leave time and payment.

When Does an Employee Qualify for Long Service Leave in Australia?

Qualifying for long service leave will depend on the state and territory of employment in Australia, but in general an employee will qualify after 7-10 years of continuous employment with the same employer.

How is Long Service Leave Paid in Australia?

The employee on long service leave is paid their ordinary pay rate for the entire period.  There are two ways to calculate what equals ‘ordinary pay’: 1) weekly salary at the time the leave is taken or 2) average weekly salary in the five years prior.  Whichever rate is higher is the one that will be offered.

Does Long Service Leave Apply if the Employee has Transferred from Overseas?

The long service leave entitlement will still apply if the employee was transferred from overseas to an Australian subsidiary or affiliate, and the time served abroad can be used meet the qualification criteria.

How Do Long Service Leave Entitlements Vary Between the Australian States and Territories?

The amount of leave offered will vary between states and territories, and here is a summary of the different leave entitlements:

Australian Capital Territory (ACT)

Six weeks of leave after seven years of employment, then one fifth of a month additional leave for each year thereafter.

New South Wales (NSW)

Two months of leave after 10 years, and then another month for every five years thereafter, with an opportunity to receive prorated leave after only five years in certain circumstances.

Northern Territory (NT)

13 weeks of leave after 10 years, then an additional week for each five years of employment thereafter.

Queensland (Qld)

Eight and two thirds weeks after 10 years, and additional leave after another five years.

South Australia (SA)

13 weeks of leave after 10 years, and an additional one and a third week for each year thereafter.

Tasmania (Tas)

Eight and two thirds weeks of leave after 10 years, then four and a third weeks for each additional five years of employment.

Victoria (Vic)

Eight and two thirds weeks after 10 years, and an additional four weeks after five more years of employment.

Western Australia (WA)

Eight and two thirds weeks after 10 years, and four and a third additional weeks after another five years.

Client Case Example

We have a client with an employee in Australia who is approaching their 10 year work anniversary, and our client wanted to know the exact amount of long service leave that is due.

We let them know that the employee would be entitled to 8.67 weeks of paid leave, which could be taken either in one leave period or in two separate periods. 

Also, one of the distinct features of long service leave is that it cannot just be paid out during employment and must be offered and taken as leave.  It can only be paid out on termination if unused, and the leave that accrues after five more years (4.33 weeks) is prorated each year starting with the 11th year, at .867 weeks per year.

Do you need more information about Australia?

Looking over the different leave periods and calculations may lead to more questions such as:

How is the leave qualification and period calculated if an employee transfers between regions with different criteria?

Do employees with less than five years of service receive any prorated leave upon termination?

If an employee does not want to take the long service leave currently, does it carry forward or is it forfeited?

Answering our clients’ questions on issues like these is the core of our international employment solution, in all areas of payroll, benefits, immigration and labor laws.  We make international employment simple.

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