On 1 November 2018, Victorian businesses bound by the States Long Service Leave Act will have to be mindful of the changes to when their employees can take their long service leave and how it is calculated.
Previously, the Long Service Leave Act 1992 in Victoria, allowed long service leave to be taken after 10 years of continuous service. After 1 November 2018, employees are eligible to take their long service leave after 7 years.
Employee's entitlement of 12 months unpaid parental leave under the National Employment Standards, will now be counted as continuous service and any period beyond the 12 months will only count as continuous service for long service leave purposes if there has been an agreement.
Long service leave will also be able to be taken in as many separate periods as both the employer and employee agree on. This allows employees to take leave on various single days, which may be of benefit to employees wanting to ease into part-time employment or retirement.
With the new Act, businesses will now need to keep employees weekly earnings and weekly hours records over the entire period of their employment to figure out the monetary amount that should be received. If your employees rate of pay is not fixed, or their ordinary hours of work are not fixed or have changed in the past 104 weeks before taking or being paid out their long service leave on termination, businesses will need to access these records to be able to calculate what is owing.
If the ordinary rate of pay is not fixed, your business will need to perform three separate calculations and the employee will receive the most beneficial. You will need to average the weekly earnings over the past 52 weeks, past 260 weeks and over the entire employment relationship. Similarly, if your employees hours are not fixed or have changed in the past 104 weeks, you will need to average their hours over the past 52 weeks, past 260 weeks and over the entire employment relationship. If your employees ordinary rate of pay and hours are fixed or their hours haven't changed in the past 104 weeks, there is no need to do this calculation.
The requirement to have these records in case these calculations need to be done for your employees, will most likely go beyond the timeframe under the Fair Work Act 2009 requirement to only keep records for 7 years. Moving forward, it would be best to keep those specific records available past the 7 year mark. If the records are no longer available in your business, until it is tested by Business Victoria, it is a grey area on what consequences there could be for your business.
The Act does specify that employers must keep long service leave records in the form approved by the Secretary. This form can be found on Business Victoria's website. If this hasn't been followed, 12 penalty units in the case of a natural person and 60 penalty units in the case of a body corporate may apply. One penalty unit is currently $161.19 until 30 June 2019.
If you are wanting advice on these new changes and want to make sure your businesses record keeping requirements are compliant under the Long Service Leave Act 2018 (Vic) feel free to give us a call on 1300 760 050 or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Written by Laura Quinlan, HR Consultant.