The Long Service Leave Act 2018 (Vic) (the new LSL Act), which will come into operation on 1 November 2018, will introduce significant changes to the long service leave regime in Victoria. The LSL Act will repeal and replace the Long Service Leave Act 1992. The LSL Act will serve as the default long service leave legislation applying to most Victorian workers.
The main changes are:
Entitlement to long service leave after 7 years
Employees will now be entitled to take long service leave after 7 years of service, instead of 10 years. While an employee may currently have long service leave paid out on termination of employment after 7 years, the right to take long service leave only arises after 10 years of continuous service. Under the new LSL Act, employees will accrue long service leave after 7 years of continuous service on a pro-rata basis.
Long service leave periods
The current LSL Act provides that long service leave must be taken in one period unless an employer and employee agree to no more than three separate periods. However, under the new LSL Act, long service leave may be taken in multiple periods of one day or more, if agreed between the employer and employee. Employers may only refuse a request for a period of long service leave where there are reasonable business grounds for doing so.
Continuity of employment
The new LSL Act changes the rules regarding the impact of absences on continuity of employment and accrual of long service leave. The most important change is that long service leave will accrue on unpaid parental leave (for the first 52 weeks) where that is presently not the case. Further, unpaid parental leave of up to 104 weeks (as opposed to 52 weeks under the current LSL Act) will not break continuity of service for long service leave purposes.
Under the current LSL Act, where employees change hours during the 12 months immediately before taking long service leave their normal weekly hours for calculating leave are averaged over the previous 12 months or 5 years, whichever average number is greater. However, under the new LSL Act, an employee’s normal weekly number of hours (where this has changed in the 104 weeks prior to taking long service leave) will be the greater of the average weekly number of hours worked:
- In the past 52 weeks;
- In the past 260 weeks; or
- The last period of continuous employment.
The new LSL Act introduces new methods to calculate long service leave where there is a change of hours over a period of employment.
Requests by employees or officers
The new LSL Act has also resulted in an increase in the powers of employees and authorised officers, in relation to the operation and enforcement of the LSL Act. Accordingly, an employer must not refuse a request by an employee to provide long service leave records. The new LSL Act also provides for authorised officers to be appointed who can monitor employer compliance by requiring the provision of relevant information or documents from employers.
Penalties have increased. Certain offences under the LSL Act will now incur a criminal penalty, not a civil penalty. Penalties have also increased to 60 penalty units (currently $9,671.40) in the case of a body corporate, up from 20 units (currently $3223.80). Where an officer of a body corporate authorised or permitted an offence, or was knowingly concerned in any way in its commission, they too may be liable.
Criminal penalty offences under the LSL Act include, but are not limited to, failure to pay long service leave entitlements and taking adverse action against an employee due to a long service leave entitlement.
Transfer of business – the definition of ‘assets’
A broader definition is being used in relation to “transfer of business”, which is likely to lead to more business purchasers being liable for long service leave entitlements.
Lessons for employers
All Victorian employers need to be aware of the significant changes to long service leave to commence on 1 November 2018. Victorian employers will need to ensure that their contracts of employment, policies, practices and payroll systems are compliant with the new laws and that requests for long service leave are appropriately responded to. If long service leave entitlements are not paid correctly on cessation of employment, employers will potentially be liable for penalties and interest.
This article was written by Mark Howard, Partner and Taylor Burt, Law Graduate.
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