By Alana Rafter Senior Associate | Australian Business Lawyers & Advisors (ABLA)

Long service leave (LSL) is an important but often confusing part of employment law in Australia. The relevant rules are subject to state-based legislation – which is not uniform across the country. Employers must navigate LSL entitlements and requests carefully, especially if the business is giving consideration to deferring  or refusing access.

 

Understanding LSL Entitlements 

Generally, employees are entitled to LSL after 10 years of continuous service. In some jurisdictions, such as Victoria and the Australian Capital Territory, an entitlement to LSL arises after 7 years of continuous service. 

Once an entitlement to LSL arises, employers should aim to grant access to LSL “as soon as practicable” having regard to the needs of the business and any agreement reached with the employee to postpone access. 

Other differences between jurisdictions include:

  • Some states and territories don’t allow the cashing out of LSL (for example, New South Wales, Northern Territory and Victoria), while others do by mutual agreement or if an industrial instrument permits.
  • Some industries have a portable LSL scheme (for example, building and construction industry, contract cleaning, and community services).

 

Never assume that the rules of one state or territory will necessarily be the same in your jurisdiction. 

 

Managing LSL Entitlements  

The following considerations should feature in your management of LSL entitlements:

1. Keep Track: Be sure to keep track of employees that are fast approaching an entitlement to LSL. Do not simply wait for employees to submit a request.

2. Business Needs: Prior to deferring or refusing an employee’s access to LSL, consider the needs of the business and whether there are reasonable business grounds for doing so (see examples below). 

3. Agreement: If an agreement can be reached about LSL, make sure it sets out the commencement date and the amount of LSL to be taken. Note: The statutory scheme in NSW, Queensland and Victoria permits separate periods of 1 day to be taken – such that an employee could take a 1 day of LSL per week over an extended period of time. 

4. No agreement: If an agreement cannot be reached, the employer has a right to direct an employee to take LSL, subject to minimum notice being provided.  For example, the minimum notice period in NSW is 1 month (unless the employee agrees to less notice). By contrast, the minimum notice period in Queensland is 3 months.

5. Documentation: Keep detailed records of any consultation, reasons for any refusal and/or agreements reached in relation to LSL.

 

Refusing a request for LSL  

The following factors have been recognised as reasonable business grounds for refusing a request for LSL:  

  • Capacity Issues: No capacity to change the working arrangements of other employees to accommodate the employee taking LSL at the requested time.
  • Practicality: Impractical to change working arrangements or recruit new employees to accommodate the employee taking LSL at the requested time.
  • Efficiency and Productivity: The LSL requested by the employee is likely to result in significant loss in efficiency or productivity.
  • Customer Service: The LSL requested by the employee is likely to have a significant negative impact on customer service.

 

To avoid escalation of a dispute to a tribunal or court, even if an employer has reasonable grounds for refusing immediate access to LSL,  employers should attempt to reach an agreement in relation to a postponed commencement date. 

Remember, employees can apply to a tribunal or court if there is a dispute about the reasonableness of the employer’s refusal.  This underscores the importance of having clear, documented reasons for any decision to refuse or delay LSL.