Pro rata long service leave

Section 8(2)(b), (3) and (3A)

An employee, including part-time and casual employees, may be entitled to a payment for pro rata long service leave on termination after completing seven years but less than ten years of 'continuous employment'. The payment of a pro rata entitlement is not automatic and is only available in certain circumstances.

This section considers the circumstances when an employee will or may be entitled to payment for pro rata long service leave. As most of these circumstances are not clear cut, you may wish to seek further advice if you are unsure. It is important that you know when an entitlement to pro rata long service may arise.

An employee having completed at least seven years of 'continuous employment' will be entitled to a pro rata payment if employment is terminated by the employer for any reason other than serious and wilful misconduct. 'Serious and wilful misconduct' is discussed in more detail in the section - 'If Employment is Terminated by the Employer'.

An employee who has completed at least seven years of 'continuous employment' will also be entitled to a pro rata payment if employment ceases either through illness that was of such a nature to justify the termination of employment, or retirement or death. In the latter case, amounts are payable to the personal representatives of the deceased. Cases involving illness are discussed in the section - 'Illness'.

A pro rata entitlement will also be payable if an employee, who has completed at least seven years of 'continuous employment', resigns due to incapacity or 'domestic or other pressing necessity' that was of such a nature to justify the termination of employment. This is discussed in more detail in the section - 'Domestic or Other Pressing Necessity'.

When making a claim for pro rata long service leave, for reasons of illness, incapacity or 'domestic or other pressing necessity', it is in the interests of both parties that the employee provide the employer with supporting evidence prior to ceasing employment. An employer should then be able to consider whether the employee is entitled to a pro rata payment.

Criteria that you may wish to consider when examining whether a pro rata entitlement exists, are set out in the decision of the New South Wales Industrial Commission in Computer Sciences of Australia Pty Ltd v Leslie (1983 AILR at 557). Although that case was in relation to 'domestic or other pressing necessity', it may be of assistance in assessing if a pro rata entitlement exists in other circumstances. The criteria are:

  1. Was the reason claimed for termination one which fell within the circumstances provided in the Act? That is, illness, incapacity, retirement, death, 'domestic or other pressing necessity' or termination of the employment by the employer for any reason other than serious and wilful misconduct.
  2. Was the reason genuinely held by the employee and not simply colourable, or a rationalisation?
  3. Although the reason claimed may not be the sole ground which influenced the employee's decision to terminate, was it the real motivating reason?
  4. Was the reason such that a reasonable person in the circumstances in which the employee was placed might have felt compelled to terminate his or her employment? That is, was the motivation of 'such a nature to justify termination'? What would the consequences have been if the employee did not take that course of action?

'Domestic or Other Pressing Necessity'

What is 'domestic or other pressing necessity'? There is no simple answer, but as a guide, ask yourself if the 'domestic or other pressing necessity' is of a kind which gives little reasonable option but to resign. The key word is 'necessity'.

Necessity needs to be looked at mainly from the employee's view. That is, what was going through the mind of the employee at the time of the resignation? Did the employee genuinely regard themselves as being under a 'domestic or other pressing necessity'? If so, that is sufficient.

What constitutes 'domestic or other pressing necessity' really depends upon the circumstances of each case. It is important to note that general statements may be misleading as the Industrial Commission will consider all the circumstances of each case, not just certain parts.

The following cases are drawn from disputes that were determined by the Tasmanian Industrial Commission. In these cases all the applicants (or former employees) had completed more than seven years of 'continuous employment'.

Case Example 1

The applicant's reason for termination was due to financial commitments. He claimed that he did not earn enough to support his wife and small child. The decision was that it was not appropriate to consider his income alone and ignore the income of his spouse.

The applicant was therefore unable to highlight what the problem was, that is, if he did not resign an undesirable consequence would have taken place. The application was rejected on the grounds that the applicant was not able to demonstrate that he had terminated his employment on account of 'domestic or other pressing necessity'. He was therefore not entitled to pro rata long service leave.

(T747 of 1987 - Behrens and TGIO)

Case Example 2

The applicant and his wife were both in the workforce and a decision had to be made about the care of their five month old child. Their options were limited. They decided that the applicant take on the carer's role. This was the prime motivating factor in his resignation.

The decision stated:

When deciding their future and the future of their children, parents have a fundamental right to choose whether or not their children will be cared for by themselves or some other person.

The undesirable consequence of not resigning was that the applicant and his wife would have been forced to place their child in care.

The application was considered to fall within the meaning of 'domestic or other pressing necessity' and the applicant was therefore entitled to pro rata long service leave.(T5156 of 1994 - Withers and Industrial Transmission and Engineering Supplies Pty Ltd)

Case Example 3

The applicant and all other employees were informed that the cable logging operation of the business was likely to close.

The decision stated that the onus is on the applicant to demonstrate to the satisfaction of the Commission that:

  • the applicant terminated his employment because of, not only some pressing necessity, but also because it was of such a nature as to justify his actions, and
  • a real and genuine problem existed and that had the applicant not resigned, a particular undesirable consequence would have taken place.

Although there was uncertainty, this did not mean that the employer's entire business was to cease. It appeared that the applicant arrived at the conclusion that once the employer's cable logging operation closed, it automatically made his position with the company redundant. However, at no time did the employer inform the employee that his position within the Company would be redundant.

It was held that the applicant was unable to demonstrate that he resigned because of 'domestic or other pressing necessity'.(T5280 of 1994 - Radford and Northrop Logging Pty Ltd.)

Case Example 4

Whilst living and working in Launceston, the applicant's wife obtained employment in Hobart. The applicant unsuccessfully approached his employer to seek either a transfer to the Hobart office, or an arrangement where he could work from Hobart and frequently travel to the Launceston office.

After his wife took up work and residence in Hobart, the applicant again approached the employer and again was told there was no position in Hobart. As a consequence the applicant informed the employer of his intention to seek other employment in Hobart. His reason for terminating employment was to bring to a conclusion an 11 month separation from his wife.

In its decision, the Commission believed the applicant's view to be genuinely held and was satisfied that it was the real and motivating reason for doing what he did. The Commissioner stated that he was satisfied that the application fell within the requirements of 'domestic or other pressing necessity'. The applicant was therefore entitled to pro rata payment for long service leave.

(T5390 of 1995 - Thomas and The Examiner Newspaper Pty Ltd)

Case Example 5

The applicant claimed an entitlement due to 'domestic or other pressing necessity' on the grounds that, at the time she ceased work, she was over six months pregnant and was terminating her employment to have and raise a child.

In this decision the Commission stated that it considered the applicant genuinely believed that the reason she gave up work was to be available to care for her soon to be born child - a decision made together with her husband.

In the decision, the Commission stated that the real questions to be answered in this matter were:

  • why the applicant terminated her employment
  • whether the reasons claimed for doing so fell within the meaning of 'domestic or other oressing necessity'

The applicant's real and motivating reasons for terminating her employment were:

  • because of pregnancy and the impending birth of the baby
  • her desire to care for the child rather than placing the child under the care of others.

The decision of the Commission stated that the decision of a pregnant woman to cease work constituted a domestic necessity and therefore warranted payment of pro rata long service leave.

(T6215 of 1996 - Brazendale and P & P Holdings Pty Ltd trading as Elphin Continental Cakes) 

Illness

When an employee claims payment for pro rata long service leave on the basis of illness, what is important is that the illness is of such a nature that the employee has no option but to resign.

It is important to note that general statements may be misleading as the Industrial Commission will consider all the circumstances of each case, not just certain parts. Three disputed Industrial Commission cases are examined below. In these cases all the employees had completed more than seven years of 'continuous service'.

Case Example 1

The applicant resigned because she could no longer cope with lifting or assisting to lift heavy and helpless patients. On advice from the employer, she obtained a certificate from her doctor stating that she had been advised to cease work in the hospital situation due to a back injury.

It was found that although the applicant did not supply a medical certificate until after termination, it should not disentitle her to long service leave if the reason for leaving was her medical condition. The medical evidence and the nature of work were not contested by her employer.

The Commission decided that the applicant's medical condition justified her ceasing work and it caused her to terminate her employment. She was therefore entitled to payment of pro rata long service leave.

(T2482 of 1990 - Smith and St Luke's Private Hospital) Case

Example 2

An ex-employee claimed to have terminated her employment on account of 'illness of such a nature as to justify the termination of that employment'. She had been advised to resign by her doctor and an appropriate medical certificate was produced.

The Commission held the doctor's evidence to be sufficient to grant the applicant's claim. The issue of whether or not the work contributed to the termination was not really a factor that needed to be considered under the Long Service Leave Act 1976.(T5468 of 1995 - Spencer and Hawkins & Daly)

Case Example 3

The applicant terminated her employment without notice after a heated discussion with the employer. She claimed an entitlement to pro rata long service leave because employment was terminated on account of 'illness of such a nature as to justify the termination of employment'.

To be eligible for pro rata long service leave, the applicant had to demonstrate that she terminated her employment on account of illness or pressing necessity. It was also necessary for her to show that the illness or the pressing necessity were of such a nature as to justify the termination of her employment.

In its decision the Commission noted the content of the doctor's reports but was not satisfied that those reports established that the applicant's illness was of such a nature that it became necessary for her to terminate her employment. The doctor did not make any recommendation to that effect.

The absence of a recommendation from the doctor did not, of itself, disentitle the applicant to pro rata long service leave on account of illness. But, without this type of medical evidence, the onus was on the applicant to establish that the alleged illness required her to terminate her employment.

The decision was that the illness was not the real and motivating reason for the applicant's termination and therefore the applicant was not entitled to pro-rata long service leave.

(T6426 of 1996 - Rowe and TSE Pty Ltd.)

If employment is terminated by the employer

An employee, who has completed at least seven years of 'continuous employment', will be entitled to a pro rata long service leave payment if employment is terminated by the employer for any reason other than serious and wilful misconduct. For an employee to be denied pro rata long service leave, termination must have occurred because of 'serious and wilful misconduct'.

'Serious and wilful misconduct'

For an action to be considered 'serious and wilful misconduct' in relation to long service leave provisions, all three components must be shown to exist. That is, the action must be 'serious' and 'wilful' and constitute 'misconduct'. In disputed matters the onus is on the employer to prove all three components exist.

What constitutes serious and wilful misconduct really depends upon the circumstances of each case. It is important to note that general statements may be misleading as the Industrial Commission will consider all the circumstances of each case, not just certain parts.

Constructive dismissal

The central issue in disputes is the question of whether employment was terminated by the employee or the employer. In essence, constructive dismissal takes place when an employee resigns at the suggestion of, or through pressure exerted by, the employer.

In a situation where the employer says to an employee something along the lines of 'I want your resignation' or 'If you don't resign I am going to sack you', that is constructive dismissal, and may mean an employee has an entitlement for pro rata payment of long service leave.

What has happened is that termination has occurred at the initiative of the employer. The employee has not resigned of his or her free will; the resignation has taken place because the employer has forced the issue. There is no question of real choice; what the employer has said is 'Your employment is finished, your only choice is whether I sack you or you resign'.

What constitutes constructive dismissal will depend upon the circumstances of each case. Cases involving 'serious and wilful misconduct' and constructive dismissal are not straightforward. Seek advice if you are unsure.