Long Service Leave

Understanding Long Service Leave - Part 2

Understanding Long Service Leave - Part 2
Amanda Jones
Amanda Jones
minute read
May 21, 2024
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In part 1 of our LSL complexities series, we covered LSL in payroll, employees taking LSL, and problems with payroll systems. Hopefully, you enter this segment understanding some of the key complications involved in LSL calculations. 

Today, we will be discussing differing state legislation and how they affect LSL calculations, as well as the relationship between LSL legislation and instruments (such as awards or enterprise agreements). 

State LSL legislation

LSL is one of the 11 National Employee Standards that form the minimum entitlements that must be provided to each employee.  However, each state and territory across Australia has different rules around LSL that are outlined in their respective regulations (Acts). The rules vary between the amount of time off work an employee can have, the rate at which the leave is paid, how to calculate that rate, and what LSL is paid when an employee is leaving their employer (this can be different depending on the reason the employee leaves their employment). Other considerations between each state are:  

  • Can an employee cash out LSL in the state they work in? 
  • How do bonus and commission payments get calculated, if at all? 
  • What are the rules of break-in-service, does the break mean the LSL starts again? 
  • Can the employee take the leave at any time and what amount of leave? 
  • When calculating the rate of LSL, how far back in the employee's history do you need to look? (Tip: in some states you need to look at the full employment history) 

Details on the rule per state or territory can be found in below links: 

Relationship between legislation and instrument

Another level of complexity with LSL is the relationship between state LSL legislation and the award or agreement the employee works under. It can be challenging to navigate which rules are applied to certain cohorts of employees. If you have any questions on what rules would reign supreme for your employees' LSL entitlements, it is always best to seek legal advice. 

As we’ve shown over this series, LSL can be a complex beast if you’re tackling it without support or proper resources. LSL calculations do not have to cause you stress if you’re listening to the right people or utilising the right technology to support compliance.

The increasing public scrutiny of underpayments by large businesses has made reputation risk management a top priority for boards. These underpayment cases often reveal broader systemic issues with far-reaching financial implications, and LSL looms as the next flash point, should businesses not act soon.

The complexities associated with LSL compliance have motivated Yellow Canary to develop a Long Service Leave compliance tool that automates compliance reviews, calculating LSL balances and payments according to state legislation and enterprise agreements.

*Yellow Canary content on this website is intended solely for the purpose of offering commentary and general knowledge. The content is not intended to constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.

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