Victoria passes new long service leave legislation: What your small business needs to know

The Victorian Parliament has recently passed the Long Service Leave Act 2018 (Vic), which will repeal the Long Service Leave Act 1992 (Vic). The new Act will come into effect on November 1, 2018 (unless proclaimed earlier by the Victorian government).

The new Act makes a number of changes to the ways in which employees can accrue and take long service leave. The key changes that employers should be aware of are:

Taking long service leave

• Employees will be entitled to take long service leave after seven years of continuous employment with an employer (instead of after 10 years);
• Employees will be entitled to take single day periods of long service leave (instead of being required to take long service leave in one period);
• Employers must not refuse an employee’s request to take long service leave unless it is on reasonable business grounds; and
• Long service leave will continue to be paid based on an employee’s ‘ordinary time rate of pay’ and their ‘normal weekly hours’. However, if either of these are not fixed in an employee’s contract of employment (or in the latter case if their weekly hours have changed in the last two years), then they must be determined as follows:
  • The greater of the employee’s average weekly rate of pay over the last 12 months, five years or their entire period of employment; and
  • The greater of the employee’s average number of hours worked over the last 12 months, five years or their entire period of employment.

Accruing long service leave

• The absences that will not break an employee’s “continuous” period of service have been expanded to include:
  • For permanent employees: any periods of paid or unpaid parental leave (no longer limited to twelve months);
  • For casual or seasonal employees: periods of paid or unpaid parental leave that are not longer than 104 weeks;
  • Carer’s leave;
  • Leave taken on account of illness or injury;
  • Any other forms of leave that are provided for under relevant employment agreements;
  • If the employee is re-employed within 12 weeks of their dismissal or resignation (instead of after dismissal only); and
  • Any period of stand-down.

• The absences that will count towards an employee’s period of continuous employment have been clarified and, in some cases, expanded, to include:
  • All periods of paid leave;
  • If a period of unpaid leave is 52 weeks or less: the whole period;
  • If a period of unpaid leave is more than 52 weeks: the first 52 weeks; and
  • If a period of unpaid leave is more than 52 weeks and it is taken to be a period of employment in accordance with the relevant employment agreement, or by written agreement, or it is taken on account of illness or injury: the whole period.
• In relation to a transfer of business, new employers must recognise any long service leave entitlements accrued by employees in the previous employment, including when assets (now including both tangible and intangible assets) are transferred to another employer and the employee performs duties in connection with those assets.

Other changes

• Employers must not refuse a request by an employee (or their representative) to provide long service leave records; and
• There are now adverse action provisions in the new Act which prohibit an employer from taking adverse action against an employee because that employee is entitled to long service leave or any other entitlement under the Act.
• The definition of adverse action reflects that which is provided in the Fair Work Act 2009 (Cth) but has been expanded to include action taken against an employee if the employer knowingly or recklessly makes a false representation about the employee’s long service leave entitlements.

In addition to the substantial increase in civil penalties for contraventions of the new Act, officers of offending bodies corporate may also receive criminal records. It is therefore crucial that employers who are affected by these changes take steps to:

• Review and update their payroll systems to ensure that long service leave entitlements will be correctly calculated and administered to employees; and
• Review and update all relevant policies and procedures to ensure that they accurately reflect employees’ entitlements to accrue and take long service leave.

NOW READ: Business groups warn against transferable long service leave entitlements