The Long Service Leave Act 2018 (Victoria) came into effect on 1 November 2018. It brings some important changes that employers need to be aware of:

1. Entitlement to LSL

Previously employees were entitled to LSL after 10 years of continuous service with one employer. Entitlement to take LSL is now down to 7 years.

If an employee leaves after 7 years, the employer is still required to pay out an employee’s accrued LSL entitlement.

Employees can now request the taking of LSL after 7 years’ service.

The LSL accrual rate of 1/60th of the period of continuous employment remains unchanged.

The new rules allow greater flexibility in taking LSL.  It can be just one day at a time, a week or the whole entitlement in one go.  This is a benefit to both employees and employers.  This will of course require agreement between both parties.

2. Continuity test

Under the old rules, an employee could lose their employment continuance if they had periods of maternity or paternity leave for more than 12 months.  The problem is this would break the 10 year figure and the no. of years would start again.

The new rules allow for a period of unpaid leave of up to 52 weeks to be included in determining the length of continuous employment. Unpaid leave in excess of 52 weeks in one period will not count toward the length of continuous employment, however will not result in a break in employment.  These new rules take effect for any leave taken after 1/11/18.

3. Transfers of business to new owner

Where an employer’s business assets transfer to a new employer, an employee who performs duties in connection with the assets is treated as being employed by ‘one employer’. The new rules ensure this extends to both tangible and intangible assets, to cover situations where only intellectual property is transferred.  This means the employee continues to accrue LSL without having to start again.

4. Calculation where part time/ no fixed hours

Under the previous legislation, for employees with no fixed hours or a change to average hours in the past 12 months, the normal weekly hours for LSL purposes was the greatest of the average weekly hours in the past 12 months or average over the past 5 years.

Under the new legislation, for employees with no fixed hours or if hours have changed one or more times in the past 2 years, the normal weekly hours is taken to be the greatest of the average weekly hours in past 12 months, 5 years or period of continuous employment.

I see these changes as providing greater flexibility in the taking of LSL.  They are a benefit to all employees as they bring forward entitlements and will be better for those with no fixed hours or changing hours and/or taking maternity/paternity leave.

(Acknowledgement to HLB Mann Judd Melbourne from which this article was referenced.)