Entitlement

Section 8

From 1 July 2012 the long service leave entitlement is eight and two third weeks of paid leave after completing ten years of 'continuous employment'. After each additional five years of 'continuous employment' an employee's entitlement is four and one third weeks of leave. An employee may have an entitlement to payment for pro rata long service leave on termination of employment after completing seven but less than ten years of 'continuous service'. For more information on pro rata long service leave refer to the section - 'Pro Rata Long Service Leave'.

Continuous employment

Section 5

'Continuous employment' is the period of employment that must be completed to establish an entitlement to leave or payment of pro rata leave on termination of employment.

'Continuous employment' generally means unbroken employment with one employer. However, the Act contains provisions that deem employment to be continuous in circumstances where employment appears to have been broken. These circumstances relate to breaks in employment due to certain absences and interruptions or, in certain other circumstances, where work was performed for more than one employer. These circumstances are discussed separately.

Absences and interruptions

The following absences and interruptions do not break 'continuous employment':

  1. annual leave or long service leave
  2. public holidays
  3. any absence due to illness or injury that has been certified as necessary by a medical practitioner
  4. any interruption or termination of employment by the employer, if done to avoid annual leave or long service leave obligations
  5. any period of approved leave to attend meetings of either the Tasmanian State Training Authority or committees established under the Vocational and Education Training Act 1994
  6. jury service or other prescribed attendance at court
  7. maternity leave
  8. any interruption arising from an industrial dispute
  9. termination for any reason, except for slackness of trade, but only if the employee is re-employed by the employer within three months of the date of termination
  10. stand down or termination due to slackness of trade, provided that the employee returns to work or is re-engaged within six months and within 14 days of an offer by the employer to return to work or be re-engaged
  11. any other absence approved by the employer.

This may appear straightforward, but it's not. All of the absences and interruptions do not break 'continuous employment' but only some of the absences count towards the period of 'continuous service'; some others don't.

An absence or interruption due to reasons listed at items (1) to (6) will count as part of the period of 'continuous employment'. An absence or interruption due to reasons listed at items (7) to (11) will not.

If an employee has completed ten years of 'continuous employment' with the employer, and absences were limited to reasons (1) to (6), then an entitlement to long service leave has been created.

However, if an employee was absent for a reason in (7) to (11), then the employee will need to work for an additional period, equal to the period of absence, before becoming entitled to long service leave. This is shown in the following example.

Example

An employee, who commenced work on 1 January 2000 and was absent on leave without pay for twelve months commencing 1 January 2005, would be entitled to long service leave on 1 January 2011.

That is, 1 January 2000 + 10 years + 1 additional year.

Explanation:

In this example, the one year absence on leave without pay in 2005, while not breaking 'continuous employment', does not count as part of the period of 'continuous employment'.

Had there been no such absence, the employee's entitlement to long service leave would be January 2010. However, because the absence was for a reason that does not count as part of the period of 'continuous employment', then at 1 January 2010 the employee would have had only nine years of 'continuous employment'. In this case the employee would need to work one additional year in order to complete ten years of 'continuous employment'.

'Continuous employment' is broken if employment is terminated (except where the terms of items (4), (9) or (10) above apply) or an absence or interruption occurs for a reason that is not covered in matters (1) to (11). This means all previous employment up to the date on which the interruption began is disregarded.

Work performed for more than one employer

Although an employee may have worked for more than one employer, the employee may be deemed to be 'continuously employed' and have a long service leave entitlement.

It is important for employers to be aware of these circumstances because it is possible to incur a potentially large financial liability.

There are at least three situations in which the Long Service Leave Act 1976 deems an employee to have been continuously employed where the employee has worked for more than one employer.

Section 5(5)

One situation occurs when an employee transfers between 'associated' corporations. A corporation is considered to be 'associated' to another corporation if it is a subsidiary or a holding company of the corporation. This is explained in more detail in the relevant corporations legislation.

When an employee transfers between 'associated' corporations, the employee's previous employment counts towards the period of 'continuous employment'. This situation is illustrated in the following example.

Example

Jim was employed by Company A for a period of six years and was then transferred to Company B, which is a subsidiary of Company A. The six years that Jim worked for Company A is to be counted as 'continuous employment' with Company B. Therefore, Jim needs to work a further four years to be entitled to long service leave.

Section 5(4)

Another situation takes place whan a 'transmission of business' occurs which means one employer taking over the business or another business. The transmission of a business does not affect an employee's long service leave entitlement. All prior 'continuous employment' must be recognised by a new employer. This is highlighted by the following examples.

Example

Sally has been employed at a hotel since March 2002. In July 2009 the ownership of the hotel changed hands but Sally continued to work at the hotel for the new owner until August 2012 when she was terminated for reasons of staff rationalisation and lack of work. Payment was sought for long service leave.

Sally has been continuously employed at the same establishment from March 2002 until August 2012 (10+ years) and therefore the same or substantially the same business was transmitted from the former employer to the latter employer in July 2009.

The employer at the time of termination has responsibility for all long service leave entitlements accrued between March 2002 and August 2012.

Section 2(2)

A third situation happens when an employee is terminated by one employer and is re-engaged to work in the same place of business, and in substantially the same kind of business, with another employer. If the re-engagement takes place within a period of two months from the date of termination from the former employer, the employee is deemed to be continuously employed.

Example

Julie was a cleaner at the XYZ Shopping Centre from July 2000 until October 2012 when her employment was terminated for reasons other than serious and wilful misconduct. Over this time she was employed by a series of cleaning contractors who held the contract for that centre over the following periods:

28 July 2000 - 30 June 2003

1 July 2003 - 30 June 2006

1 July 2006 - 30 July 2009

1 July 2009 - 30 October 2012

In all, Julie was employed by four different cleaning contractors, but worked at the one business location for a continuous period of 12+ years. The fact Julie had been terminated by successive cleaning contractors did not change the fact that she has continued on '... in or about that place in the business of some other employer ...' and the business of all of the successive employers was '... of the same kind, or substantially the same kind as the business in which Julie was employed ...'.

Granting long service leave

Section 12

Long service leave may be taken after an employee has established an entitlement to leave. It cannot be taken in advance. An employer may grant the leave on application. There is no form to apply for long service leave. An application may be either a verbal or written request. In considering the request, the employer is entitled to have regard to the needs of the business.

Long service leave must be taken in one period unless the employer and employee have agreed that it will be taken in two periods.

'Cashing-in' long service leave

Section 10

Employees with the agreement of their employer may 'cash in' long service leave by receiving payment in lieu. This means that the employer may pay an employee the cash value of long service leave due and the employee will not be absent from work. An employee may also take a mixture of cash and leave.

Payment for long service leave

Sections 7A & 11

An employee is to be paid 'ordinary pay' for a period of long service leave. 'Ordinary pay' is the remuneration that the employee would receive if the employee remained at work during that period.

'Ordinary pay' includes:

  • shift penalties
  • part-time and casual loadings
  • allowances which are generally paid both for all hours worked and for all purposes of the award
  • the cash value of board and lodging, other than board and lodging provided by the employer for work in localities distant from the employee's genuine place of residence.

The following payments are excluded from 'ordinary pay' and are not payable during periods of leave:

  • overtime payments
  • award special rates such as danger, hardship or inconvenience type allowances
  • travel payments and allowances
  • bonus payments
  • living away from home allowance
  • meal allowances.

The 'ordinary pay' for a casual employee is based on the average number of hours worked over the 12 months immediately prior to the commencement of leave.

That is, the total hours worked over the past 12 months divided by 52 (weeks).

Example

Terry has completed ten years of "continuous employment" and in the year immediately before going on leave, worked 1508 hours. Terry would receive eight and two thirds weeks of leave on 29 ordinary hours pay for each week of leave.

That is: 1508 hours = 29 hours per week
52 weeks

'Ordinary pay' is calculated differently for an employee on commission, such as a commercial traveller or a real estate salesperson. It is based on the average weekly remuneration received over the three months immediately prior to the commencement of leave.

Section 12(6)

An employee taking long service leave is to be paid in one of the following ways:

  • in full when the employee commences leave
  • on normal pay days throughout the period of leave
  • in any other way agreed upon between the employer and employee.

Casual and part-time employees

Section 5(3)

Casual and part-time employees are entitled to long service leave if they have completed ten years of 'continuous employment'. They are considered to be continuously employed if they have been regularly working for 32 hours or more in each consecutive period of four weeks.

An employee engaged before 21 December 1979 is considered to be continuously employed if the employee was regularly employed throughout the period. An employee in this situation is not required to regularly work a minimum of 32 hours in each four-week period.

It is also important to note that casual and part-time employees may have an entitlement to pro rata long service leave if employment is terminated after seven years of 'continuous service'. For more information refer to the next section.