Changes to long service leave in Victoria

In brief

From 1 November 2018, new legislation¹ governs long service leave in Victoria. The law introduces significant changes that will have practical implications for employers. Senior Associate Stephanie Burn reports.

How does it affect you?

Employers should:

• review current policies to ensure they are consistent with the new legislation;
• review current long service leave balances to ensure business needs will be covered if an employee with close to seven years' continuous employment takes their long service leave;
• review current payroll/HR systems to ensure leave accruals are accurately calculated and recorded (particularly to avoid interest charges and penalties for non-compliance); and
• ensure employees who take unpaid parental leave from 1 November 2018 accrue long service leave for up to one year.

The changes

While the new legislation does not alter accrual rates, several changes to long service leave in Victoria will have practical implications for employers:

• most noticeably, employees are able to take long service leave after seven years' continuous employment instead of 10 years, and are able to take one day at a time;
• unpaid parental leave of up to one year is counted towards an employee's period of continuous employment for the purposes of calculating long service leave. Employment is also continuous if the employee is re-employed within 12 weeks of termination due to dismissal by the employer, resignation by the employee, a specified term contract expiring or the completion of an apprenticeship; and
• if an employee's ordinary hours of work go up and down in the two years before they take long service leave, their pay during the leave will be based on the greater of the average hours they worked in the preceding 12 months, the preceding five years, or over their entire period of employment with the employer.

In addition to the legislation that commenced on 1 November 2018, other legislation commencing in mid-2019 will give workers in the community services, security and contract cleaning sectors access to portable long service leave benefits.² Workers in those sectors will be eligible for long service leave after seven years working in the industry, irrespective of the number of employers they have during that time. We will provide a comprehensive update on this legislation closer to the time.