Victorian Long Service Leave changes commencing 1 November 2018

The Victorian parliament has passed the Long Service Leave Act 2018 (Vic) (LSL Act 2018), which will replace the Long Service Leave Act 1992 (Vic) (LSL Act 1992), effective 1 November 2018.This change will impact the long service leave liabilities of businesses operating in Victoria. As a result, businesses should be cautious to ensure they have accurately ascertained their employees’ leave debts and accruals to ensure they are appropriately managed to minimise the impact upon operations.

Key points

• Employees will be entitled to take long service leave after completing 7 years’ continuous employment instead of 10 years.
• Employees can take long service leave as one or more periods of leave, including taking single-day periods of leave.
• Unpaid parental leave will be included in any calculation of continuous employment.
• Long service leave entitlements will be calculated based on the last period of continuous employment for employees whose hours of work have changed during the last 24 months. This is in addition to the existing formulas, which are calculated based on the last 12 months or the last five years.
• Continuous service will be recognised where an employee is re-employed by the employer within 12 weeks of initial termination of employment, even where the employee had resigned.
• The provisions dealing with transfers of business have been expanded to apply to employees who perform work with a new employer in connection with intangible assets of their prior employer (such as intellectual property).

Change of ownership / outsourcing of work

• If the ownership of a business employing an employee changes but the employment of the employee continues, the new owner must not refuse to provide the employee long service leave to which the employee is entitled, including long service leave accrued before the change of ownership.
• There are changes to recognition of employee tenure where an employer directly employees a person who previously provided outsourced services to the employer’s business.
• The definition of ‘assets’ will be expanded to capture all tangible and intangible assets and will capture all transfer of asset arrangements for the purpose of ensuring continuity of service for transferring employees.

Continuity of service

The following types of absences will not break continuous service.

• All periods of parental leave (other than in the case of a casual or seasonal employee).
• In the case of a casual or seasonal employee, parental leave of up to 104 weeks.
• In the case of a casual or seasonal employee, unpaid parental leave that is not longer than 104 weeks.
• All carer’s leave.
• All leave on account of illness or injury.
• Any other form of leave provided for, and taken under, the relevant employment agreement.
• If an employee is re-employed within 12 weeks of their dismissal or resignation.
• Any period of stand down.

Calculating length of continuous employment

The following periods of absence are taken to be periods of employment when calculating the length of an employee’s period of continuous employment.

• All paid leave periods.
• If a period of unpaid leave is less than or equal to 52 weeks, that period.
• If a period of unpaid leave is more than 52 weeks, the initial 52 weeks.
• If a period of unpaid leave is more than 52 weeks, the entire period of unpaid leave if the period of absence is taken to be a period of employment:
• in accordance with the relevant employment agreement;
• by written agreement between the employee and the employer;
• if the leave is taken on account of illness or injury.
• All periods of absence arising from an interruption to, or termination of, employment caused by the employer with the intention of avoiding an obligation in relation to long service leave.
• All periods of absence arising from the transfer of assets from one employer to another, if the employee usually performs duties connected with those assets.

Principles for calculating LSL entitlement

• If the ordinary time rate of pay is not fixed for an employee’s work under the relevant employment agreement, the employee’s ordinary time rate of pay is taken to be the greater of the average weekly rate earned by the employee in the last 12 months, five years or the entire period of employment.
• If no normal weekly number of hours is fixed for an employee’s work under the relevant employment agreement, or if the fixed number of hours had changed in the prior two years, the employee’s normal weekly hours is taken to be the greater of the average number of weekly hours worked by the employee in the last 12 months, five years or the entire period of employment.
• Employees may work for hire or reward on a day they are taking long service leave, provided it is outside of the hours during which the employee takes long service leave.

Compliance aspects

• The adverse action prohibitions under the Fair Work Act 2009 (Cth) have been replicated in the LSL Act 2018, except that the definition of “adverse action” has been expanded to include instances in which an employer takes adverse action against an employee if the employer knowingly or recklessly makes a false representation about the employee’s long service leave entitlements.
• Employers must not refuse a request by an employee (or their representative) to provide long service leave records.
• An additional indirect benefit for employees is that compliance officers now have the power to compel a person to produce relevant information or documents where a suspected breach of the legislation has occurred.
• The limitation period for breaches of long service leave laws has been increased to six years from five years under the previous legislation.
• Employers cannot refuse an employee’s request to take long service leave, unless it is on reasonable business grounds.

These changes create greater flexibility for employees but may present challenges to employers. Employers should reassess their long service leave liabilities and obligations under the LSL Act 2018 and seek legal advice if necessary. If you need advice or assistance with employee contracts, call Total HRM on 1800 868 254.