Coming across the seas: prior overseas service not counted as 'continuous employment' for long service leave in Victoria

In brief 3 min read

A recent decision of the Victorian Supreme Court of Appeal has confirmed that prior overseas service will only count as 'continuous employment' for long service leave accrual where the overseas service had a connection with Victoria at the time it was performed.¹

Key takeaways

• For a period of continuous service performed outside Victoria to count as 'continuous employment' for the purposes of the Long Service Leave Act 2018 (Vic) (LSL Act), the service must be 'in and of Victoria'.
• While service 'in and of Victoria' can extend to work performed outside Victoria, or work performed for an employer located outside Victoria, employment that has no immediate or intended connection with Victoria at the time it is performed will not count.

Background

Under the LSL Act, an employee becomes entitled to long service leave after completing seven years of continuous employment with one employer.

The dispute in this case arose when the Wage Inspectorate of Victoria wrote to Infosys Technologies Limited (Infosys) alleging that it had failed to pay long service leave entitlements to two software engineers who had commenced employment in India and later relocated to Victoria.

Although both engineers were based in Victoria at the time their employment finished, they had been based overseas for the majority of their time working for Infosys:

• the first engineer had been employed by Infosys for over nine years, serving the last two years in Victoria and the remainder in India and the United Kingdom; and
• the second engineer had been employed by Infosys for 12 years, serving the last two years in Victoria after almost a decade working in India.

The issue was whether the employees' overseas service prior to moving to Victoria should be included in their length of service for the purposes of determining their entitlement to long service leave under the LSL Act.

Decision

The Court of Appeal considered the LSL Act in light of the Interpretation of Legislation Act 1984 (Vic), concluding that because the LSL Act could only deal with 'matters or things' in or connected to Victoria, only continuous employment that is 'in and of Victoria' must be counted for the purposes of long service leave accrual.

The Court of Appeal declined to exhaustively list the circumstances where overseas service would be considered 'in and of Victoria'. However, the court indicated that there is likely to be a sufficient connection where:

• the work performed overseas was directed by a company that is Victorian-based; or
• the employee commenced work in Victoria prior to performing work overseas; or
• the work performed overseas was a period of secondment from a company that is Victorian-based.

Having determined service must be 'in and of' Victoria to count for the purposes of long service leave accrual, the Court of Appeal concluded that because the prior overseas service of the two software engineers had no connection to Victoria at the time it was performed, neither of the employees had completed the requisite seven years of continuous employment to be entitled to long service leave.

In coming to its conclusion, the Court of Appeal considered the approach in Cummins South Pacific Pty Ltd v Keenan,² in which the majority assessed whether a connection with Victoria existed by identifying a period of employment with one employer and considering whether the period taken as a whole had a substantial connection to Victoria (rather than considering whether each separate period of service had the requisite connection to Victoria at the time it was performed). The Court of Appeal declined to follow the majority's approach, concluding that it was 'plainly wrong'.