We would like to remind our clients, operating in Victoria that the new Long Service Leave Act 2018 (Vic) assented on 15 May 2018 is coming into effect on 1 November 2018.
The new Act provides an earlier access to Long Service Leave and more flexibility as to how leave may be taken. Another significant change is the treatment of parental leave as any other form of leave (annual or long service leave), including periods of parental leave as a period of service for the purpose of eligibility periods.
The main changes to the long service leave, mandated by the Act, are:
Entitlement: employees are now entitled to access long service leave after 7 years of service. Long Service Leave will accrue at the same rate of 1/60 of the period of an employee’s continuous employment, which is approximately 0.86667 weeks per annum.
Calculation of long service leave: as it was before, long service leave is calculated at employee’s ordinary rate of pay, which means the pay an employee is entitled to receive at the time they take long service leave for working their normal weekly hours at their ordinary time rate of pay. However, if the ordinary hours are not fixed or have changed in the last 2 years (104 weeks), the ordinary rate of pay is taken to be the average weekly rate earned by the employee in the 52 weeks, or in the 260 weeks or average weekly rate earned by the employee for the entire period of continuous employment, whichever is greater (See section 15 of the Act).
Flexibility of long service leave: The employees are now entitled to take their accrued long service leave for a period of not less than 1 day and an employer should not unreasonably (other than on genuine business grounds) withhold the approval of such leave.
Continuity of service: continuous employment will not be broken where employment is terminated at the initiative of employer or employee, where an employee is re-employed within 12 weeks.
- Permanent employees: any period of paid parental leave or/and unpaid parental leave up to 52 weeks, will count towards the period of service (See sections 12 & 13 of the Act). The Act clarifies that if the parental leave has started before it came into operation, only that part of the absence period occurring on and from the commencement of the Act is taken to be a period of employment. An additional period of parental leave over the initial 52 weeks is not counted as service but will not break continuity of employment (See section 14(a) of the Act).
- Casual or seasonal employees: paid or unpaid parental leave up to 104 weeks will not break continuity of service but will not count as a period of service when determining eligibility for long service leave.
Victoria is the first state which legislated that paid or unpaid parental leave up to 52 weeks should be counted as a period of service. At this stage there is no indication that any other states would follow the suit.
It is also worth noting that the Act introduces more generous terms for portability of long service leave for transferable employees when a sale of business occurs.
Where an employer fails to comply, a criminal penalty (as oppose to civil) will be imposed of up to 60 penalty units (approximately $9,671.40 as at 1 July 2018) for each day during which the offence continues. Therefore, it is extremely important that the employers in Victoria are prepared for these changes.
We recommend that our clients in Victoria update their payroll systems to include the relevant periods of parental leave into service calculations and seek advice if they have any questions about the provisions of the new Act in unusual or unfamiliar circumstances.
At Livingstones, we are always happy to assist you with your enquiries, so please don’t hesitate to reach out to one of our consultants on +61 7 3833 1200.