When does an employer have to pay long service leave? The basic rule in Queensland is that full time and part time employees are entitled to 8.6667 weeks of long service leave after 10 years service. More long service leave can be taken after 15 years of service and after that, long service leave can be taken as it accrues. Long term casual and seasonal employees also have an entitlement. Portable long service leave schemes apply in the building and construction, contract cleaning, coal and mining industries. This is the position for most employers operating in, and employees living in, Queensland. However, the rules can vary slightly in other states.
Unpaid leave, such as parental leave, does not count towards long service calculations but does not break the service. Its the same if employment ends but the employee is re employed with the same or a related employer within 3 months. Payment is made at the employee’s ordinary rate of pay or average commissions (for commission only employees such as certain real estate agents). The intention is that long service leave is taken as leave rather than a cash payment. However, long service leave can be cashed out if provided by industrial award or enterprise agreement. Otherwise, the Queensland Industrial Relations Commission can order payment on genuine hardship or compassionate grounds.
Can an employee be forced to take long service leave? The parties should agree about when long service leave is to be taken. However, where there is no agreement, an employer can direct an employee to take at least 4 weeks long service leave by giving at least 3 months written notice. Employers should be careful to diary note when long service leave is due so that large amounts of accrued leave do not accrue on the books. It is wise to make provision for long service leave for longer term employees well before their date of entitlement.
What about pro rata entitlements? After 10 years, employees are automatically entitled to full payment of long service leave on termination regardless of the reason for departure. However, employees are entitled to pro rata payment of long service leave if their employment ends after 7 years but less than 10 years if the employee:
- dies;
- resigns because of illness or incapacity or because of a “domestic or other pressing necessity”;
- has their job made redundant and they don’t accept another job in the company; or
- is dismissed unfairly.
If an employee has medical evidence of a significant illness, then they will usually be entitled to pro rata payment. It is increasingly common for employees to resign because of the effects (real or perceived) of workplace bullying. Other circumstances that have given rise to a pro rata entitlement are:
- a new parent resigning to look after their child, or a sick partner or children;
- family relocation due to the employee’s partner getting a new job in another town;
- working night shifts had become a strain on the employee’s family relationships and repeated requests for a transfer to the day shift had not been granted;
- the employer was relocating and the employee would have been required to travel substantial distances to attend work each day.
An employer is able to ask for reasonable evidence before agreeing to make a pro rata payment. If the employer is not satisfied, the employee can apply to the Queensland Industrial Relations Commission for a payment order. Its important to know these rules in order to avoid unpleasant financial surprises. Please contact us if you would like further information or help.