From 1 November 2018, changes to employee entitlements for long service leave (LSL) came into effect for all for Victorians. New rules are now in place which are generally in the benefit of employees.
Here is a snapshot of the key changes:
- Employees are not required to take LSL in minimum three month blocks anymore. An employee may take LSL in as many periods as they wish, provided an agreement is reached with their employer. The minimum amount of time for an employee to take their LSL is one day.
- An employee is now able to take LSL after seven years’ service. Formerly, an employee was only entitled to a pro rata payment of LSL after seven years if their employment was terminated.
- Persons who go on parental leave will not have their continuous service period broken. This includes both paid and unpaid leave. LSL will accrue for up to 52 weeks on unpaid parental leave, and continuity of service will not be broken if longer periods are taken by employer agreement.
- An additional method of calculating average work hours is available for employees who are entitled to LSL. The old rules allowed for an accrual based on average work hours for the employee over the past 12 months or five years; whichever was higher. The averaging calculation can be extended to be over the entire period of continuous employment.
- Where a business transfer occurs, additional measures will ensure employees’ continuous service is not broken. Under the new rules, intangible assets are added to the applicable business transfer assets. Therefore, where an employee changes employer due to this type of takeover or merger, they will not lose their LSL entitlements.
As a result, we advise the following measures to be taken into consideration for your business:
- Ensure that records relating to employee hours worked are available for their entire employment period, to ensure that future calculations can be made.
- Review the status of employees of parental leave, to ensure that appropriate transitional entitlements are included. This may include adding eligible periods of parental leave to the LSL accrual after 1 November 2018.
- Where calculators are being used to determine LSL provisions at years end, to ensure appropriate measures are taken in respect of entitlement probabilities. If you require any further clarifications on these changes, please do not hesitate to contact us.
For a full summary of the changes refer to an article prepared by Hall & Wilcox here.
To discuss how this may impact your circumstances contact PPT on (03) 5331 3771 or (03) 8391 3063 .