The Victorian Government has made significant changes to long service leave, making it fairer and more flexible for women, parents and carers.
By 1 November 2018, the current Long Service Leave Act 1992 (Vic) will be repealed and replaced by the Long Service Leave Act 2018 (Vic) (Act). The Act will serve as the default long service leave legislation applying to all Victorian workers, unless specifically excluded.
What are the key changes?
Entitlement to take LSL
Currently, employees can take LSL after 10 years of continuous service with one employer. After 7 years of continuous service with one employer, the employee is entitled to have their LSL paid out on a pro rata basis if their employment ends.
The new reforms entitle an employee to take LSL after 7 years of continuous service with one employer on a pro rata basis, rather than having to wait until they have attained 10 years of continuous service.
Leave period
Currently, LSL must be taken in one period, unless an agreement is reached between the employer and employee for separate periods, whereby the first 13 weeks of leave is taken in 2 or 3 separate periods and 2 separate periods thereafter.
The new reforms enable employees with accrued LSL greater flexibility to take leave in minimum 1 day periods. An employer may refuse an employee’s request for LSL of 1 day or more on the basis of reasonable grounds.
Calculation of continuous service
Currently, any period of unpaid parental leave will not count towards an employee’s period of continuous service.
Under the new reforms, continuity of service will not be broken by parental leave (whether paid or unpaid) even if it is in excess of 12 months. Importantly, any period of unpaid leave up to 12 months is included when calculating an employee’s continuity of service.
Casual and seasonal employees
Under the current regime, casual and seasonal employees must not have more than 12 weeks break between their engagements with their employer or their continuity of service will be broken.
The new reforms retain this approach but provide an exception where continuity of service will not be broken where a casual or seasonal employee:
- takes up to 2 years parental leave (whether paid or unpaid);
- the employer and employee so agree in advance of an employee’s absence;
- where the break is due to seasonal factors; or
- where the employee had a reasonable expectation of re-employment.
Resignation or termination of employment
Under the current regime, an employee’s continuity of service is not broken if they are dismissed at the initiative of the employer and then re-employed by the same employer within 12 weeks.
The new reforms extend the current approach so that continuity of service will not be broken either by:
- termination at the employer’s initiative or termination by the initiative of the employee (resignation),
- the expiration of a specified terms in an employment contract, or
- because the employee has completed their apprenticeship.
For example, if an employee resigned and is re-hired within a 12-week period, their service remains continuous.
Sale of business
Currently, if a business is sold and its assets are transferred to the new employer, an employee’s continuity of service is not broken where they perform duties in connection with those transferred assets. The new employer becomes responsible for the employee’s LSL entitlements. However, this only applies in relation to tangible assets such as land, plant and equipment.
The new reforms expand the definition of ‘assets’ to capture both tangible and intangible assets.
Calculating LSL
Currently, if an employee’s hours have changed in the 12 months prior to taking LSL, their weekly hours are calculated by using the average over the previous 12 months or 5 years (whichever is greater).
The new reforms provide a third option in calculating LSL, whereby weekly hours are calculated by using the average hours worked over the entire period of their employment with the employer. This approach is applied where an employee’s ordinary hours of employment fluctuate in the 2 years before they take LSL.
These changes to LSL in Victoria are significant so please contact us if you need assistance understanding their impact and the application to your Victorian employees.