Rebecca Best and Paul Ronfeldt

Get Ready – New Victorian Long Service Leave Laws Commence 1 November 2018

Rebecca Best and Paul Ronfeldt

22 October 2018

Award Conditions Employment Contracts Employment Policies

From 1 November 2018 employers in Victoria need to be ready for significant changes to long service leave (LSL) accruals, greater flexibility around taking LSL and increased enforcement / compliance powers when the Long Service Leave Act 2018 (Vic) (2018 LSL Act) takes effect.

LSL accrued before the 2018 LSL Act commences will not be affected by the new rules for accrual.  However, once the new rules commence, employees will be able to access that accrual in accordance with the new rules.

Key changes include:

  • employees will be able to take LSL after seven years of continuous service, rather than the existing 10 year mark;
  • employees will be able to take LSL in separate periods, even as short as one-day;
  • LSL will continue to accrue during any period of paid parental leave, unpaid parental leave of up to 12 months or unpaid sick leave;
  • casual or seasonal employees’ employment will be regarded as continuous, despite a break of up to two years paid or unpaid parental leave; and
  • the average weekly hours over the entire period of service may be used to calculate the normal weekly hours, which will create significant challenges for employers whose records do not allow for that calculation to occur.

These and other changes are described in more detail in the table below.

 

New provision (2018 LSL Act)

 

Comparison with previous provision

 

Taking leave

 

Access

 

Employees will be entitled to take their accrued LSL on a pro rata basis after seven years of continuous employment.

 

Employees are not able to access accrued LSL until they attain 10 years of continuous service, except on termination.

 

Flexibility in taking leave

 

LSL may be taken in one-day periods, subject to approval by the employer.

Reasonable business grounds must exist to refuse.

 

LSL must be taken in one period, unless the employer agrees otherwise, in which case the first 13 weeks must be taken in two or three separate periods and any subsequently leave in two separate periods.

 

Continuous employment

 

Period of unpaid parental leave or unpaid sick leave

 

Continuity of service will not be broken by any period of paid or unpaid parental leave.

LSL will accrue during:

    • a period of unpaid parental leave of up to 12 months; or
    • any absence on account of illness or injury.
 

LSL does not accrue during a period of:

    • unpaid parental leave; or
    • unpaid leave on account of illness or injury in excess of 48 weeks in any year.
 

Re-engagement following termination

 

Employment will be taken to be continuous if an employee is re-engaged within 12 weeks of:

    • termination by the employer or employee;
    • expiration of a specified term contract; or
    • completion of an apprenticeship.
 

Employment will be taken to be continuous if an employee is re-engaged within three months of termination at the initiative of the employer only.

 

Business transfer

 

If business assets (tangible or intangible, such as ‘good will’ or intellectual property) are transferred to another business, a transfer of employment between the businesses will not break continuity of service.

 

Transfer of business only applies to the transfer of tangible assets such as land, plant and equipment.

 

Casual and seasonal employment

 

A casual or seasonal employee’s employment will be regarded as continuous, despite a break in engagement exceeding three months, if:

    • the employer agrees prior to the absence;
    • the break is caused by seasonal factors;
    • the employee had a reasonable expectation of re-employment; or
    • the employee takes up to two years paid or unpaid parental leave.
 

A casual or seasonal employee’s employment is regarded as continuous, despite a break in engagement, only if the break does not exceed three months.

 

Calculation of leave

 

Unfixed hours or change in hours

 

Normal weekly hours will be the greater of the average weekly hours worked over:

    • the past 12 months;
    • the past five years; or
    • the entire period of continuous service.
 

Normal weekly hours are only calculated based on the greater of the average weekly hours work over:

    • the past 12 months; or
    • the past five years.
 

Extension of liability and penalties

 

Penalties

 

Two former civil penalties will be converted into criminal penalties, relating to:

      • an employer failing to disclose that an employment agreement would modify or remove the employee’s LSL entitlement; and
      • an employer taking adverse action against an employee because the employee is entitled to LSL seeks to exercise their right to take leave or makes an enquiry as to their entitlement.

Penalties will increase to 12 penalty units for an individual, or 60 penalty units for a body corporate. That is currently, $1,934.28 for an individual or $9,671.40 for a body corporate.

 

Existing penalties range from 5 penalty units to 20 penalty units. That is currently, $805.95 to $3,223.80.

Employers with employees in Victoria should update relevant company policies and procedures, such as payroll practices, to facilitate these changes. If you require advice or assistance to update your policies or procedures, or would like more information about these changes, please contact a member of our Employment and Safety Team.

Authors

Rebecca Best | Special Counsel | +61 3 8080 3773 | rbest@tglaw.com.au

Paul Ronfeldt | Partner | +61 3 8080 3533 | pronfeldt@tglaw.com.au

Mark Branagan | Partner | +61 3 8080 3638 | mbranagan@tglaw.com.au