We were recently asked to advise a client in respect to their obligations to pay their employees. Long Service if they are terminated after 5 years. Fair Work Act 2009 (Cth) reserves the right to make laws in respect to the long services leave entitlements to each individual state. Accordingly the laws vary from state to state.
In Victoria, from 1 January 2006, Long Service Leave is available after 10 years of continuous service. An employee obtains an entitlement to a period of leave equal to one-sixtieth (1/60) of their total period of continuous service.
This means that an employee will be entitled to 13 weeks’ leave at their normal rate of pay after 15 years of continuous service and 8.67 weeks’ leave after 10 years. Additionally, an employee can claim pro rata long service leave after 7 years of employment.
If an employee is terminated prior to taking long service leave at any time after 7 years of continuous service, they are entitled to receive their full accrued entitlement to Long Service Leave regardless of the circumstances giving rise to the termination.
Where an employee’s hours vary, their hours will be averaged over the previous 12 months and the previous 5 years. The amount to be paid whilst on Long Service Leave is to be calculated by reference to the greater of the two averages.
Certain industries, such as the construction industry, may also prescribe their own Long Service Entitlements, so it is important to seek advice tailored to the relevant industry.