Do you understand your long service leave requirements?
Long service leave is a great incentive for employees to stay with a company for an extended period of time. Here is all the information you need to know about long service leave.
What is long service leave?
Long service leave (LSL) is given to an employee for a long period of continuous service with one employer. In most cases, an employee must have worked at the same company for 10 years in order to be eligible for LSL. It is a great way of rewarding workers for being loyal to the company, and encourages employees to build their career within the organisation.
How much LSL does an employee get?
An employee is entitled to 8 ⅔ weeks of long service leave, to be paid at their ‘ordinary pay’. This means that they will not get any overtime payments, penalty rates, or allowances while on long service leave.
After their first long service leave entitlement, employees receive long service leave every five years after the initial 10 years of employment. This is an entitlement of 4 ⅓ weeks of paid leave. Any time previously spent on LSL counts towards the next entitlement.
What happens when an employee resigns before receiving their LSL?
If an employee resigns or is terminated before they reach the long service leave requirements, a portion of long service leave must be paid out. The way to work this out is:
- If the employee has completed more than 7 but less than 10 years of continuous employment with a company, they are entitled to long service leave on a proportionate basis of 8 ⅔ weeks for 10 years of continuous employment. This is calculated for the employee’s entire period of employment, including years, months and days.
- If an employee already had long service leave, they are entitled to leave on a proportionate basis of 8 ⅔ weeks for 10 years of continuous employment since they last became entitled to long service leave. This is calculated on completed years only.
It is important to keep in mind that when buying a business, you also take on the responsibility to give employees their LSL entitlements. The length of employment for an employee is based on the organisation, rather than the specific owner of the business.
For more information on long service leave contact us on (08) 9316 9896 or enquiries@processworx.com.au.
