What do the changes to long service leave in Victoria mean for employers?

The Victorian Government has made some significant changes to its Long Service Leave Act that will impact both employers and employees.

The changes took effect from November 1, 2018.

The biggest changes include:

• Employees will be able to apply for long service leave (LSL) after seven years of employment, rather than the current 10 years
• Reducing the minimum amount of LSL that can be taken to one day
• Allowing for some breaks in service. For example, up to 52 weeks of unpaid parental leave (or longer in some situations) will count towards accrual of LSL
• Allowing for some absences from work. For example, unpaid parental leave will, in most cases, not break continuous employment.

The new Long Service Leave Act doesn’t change the amount of leave that employees accumulate. This is still calculated by dividing the number of weeks of employment by 60. This amounts to 13 weeks over 15 years of employment, for example.

Other key provisions of the Act that will affect leave planning are:

• Employees can take twice the amount of leave at half pay
• LSL can’t be cashed in. However, it will be paid out if employment is terminated
• Employers can direct employees to take LSL, with 12 weeks’ notice.

Note that some provisions are subject to employer agreement, though in many cases this can only be withheld if there are ‘reasonable business grounds’ for declining the leave.

Changes for employers

Many employers will face higher costs due to periods of unpaid leave now applying to the accrual of long service leave and some breaks in service no longer restarting the LSL clock.

The changes also lift the level of paperwork required to keep track of employee entitlements.

Penalties apply for not keeping proper records or for not complying with numerous other requirements.

It’s therefore important that employers understand the details.

Managing long service leave

With the LSL changes now in place, you may be wondering how to best put it in practice.

Should you allow your staff to take the leave all in one go? Should you give your staff the chance to take half the pay for twice as long? Should your staff use it up in dribs and drabs? And what’s the best way to manage LSL for your staff members that are close to retirement or mid-career?

The greater flexibility offered by the new LSL rules open up additional strategies for both lifestyle and financial management.

The best outcome will depend on your personal situation, and LDB can advise how your business can best manage the new long service leave rules.

To find out more, give us a call on (03) 9875 2900 or fill out the contact form below and we’ll be in touch.