Tuesday, 5 June 2018

Significant Changes to be made to Long Service Leave in Victoria

The Long Service Leave Bill 2017 (Vic) (the Act) recently passed both houses of parliament and will soon repeal and replace the Long Service Leave Act 1992 (Vic). The new Act, which is to commence from 1 November 2018, is expected to establish more flexible, simplified and fairer provisions for those accessing Long Service Leave entitlements.

We have summarised the key changes in a table below.

Current PositionNew Legislation
Eligibility to take Long Service LeaveAn employee can take long service leave after ten years of continuous service.

Leave is paid out on termination if employment has ceased after seven years of continuous service.
An employee will be eligible to take pro rata long service leave after seven years’ continuous service.
Long Service Leave ‘one day at a time’Long Service Leave may only be taken in one period, with some limited exceptions (ie where there is an agreement between the employer and employee).Employees can take Long Service Leave in minimum periods of one day at a time.
Treatment of parental leavePeriods of parental do not count for the purposes of ‘continuous service’.

Parental leave in excess of 12 months breaks continuity of service.
Both paid and unpaid parental leave up to 12 months will count towards continuous service.

Any parental leave beyond 12 months will not break continuity of service.
Changes to working hoursWhere there is variability in an employee’s hours of work in the 12 months immediately preceding Long Service Leave, the pay for periods of Long Service Leave is based on an average of the last twelve months or five years of service then (whichever is the greater). A third option for averaging has been introduced - the average hours worked over the entire period of continuous service (where that is longer than 5 years).

The employee is entitled to the greater of the three averages.

What are the Practical Impacts of These Changes?

These changes are directed at providing more flexibility and ease of access to employees. Of most significant note, is the inclusion of parental leave up to 12 months’ in continuous service.

While aside from the treatment of parental leave, the changes are unlikely to result in significantly increased costs for businesses, they will require businesses to adapt the way they manage and administer leave. Employers are encouraged to review their Long Service Leave policies and administrative systems to ensure that they are consistent with the new changes.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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