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Major changes set for Victoria’s long service leave laws

Following the second reading of the Long Service Leave Bill 2017 (Vic) (LSL Bill) on 24 August 2017, long service leave in Victoria is set to become more flexible and easier to access for employees.

If it gains the necessary support in the Victorian upper house, the LSL Bill will amend how the current Long Service Leave Act 1992 (Vic) (LSL Act) operates in a number of ways. The suite of reforms include the following key amendments:

  1. Allowing employees to take LSL after seven years

The current LSL Act provides employees with a pro rata long service leave entitlement after seven years of service. While an employee may have long service leave paid out if their employment ceases after seven years, the right to take long service leave currently only arises after 10 years of continuous service.

However, the LSL Bill allows employees to take leave after seven years of continuous service with one employer.

  1. Allowing employees to take LSL one day at a time

The current LSL Act states that long service leave must be taken in one period. However, if an employer and an employee agree, an employee may take the first 13 weeks of leave in two or three separate periods, and may take any further leave to which he or she becomes entitled in two separate periods.

The LSL Bill, however, allows employees to take long service leave one day at a time, provided that the employer and employee agree. This is aimed at providing employees with greater flexibility, particularly for those transitioning to retirement.

  1. Treatment of parental leave

Under the current LSL Act, where an employee takes more than 12 months parental leave, this will break their continuity of service and they will lose any accrued long service leave entitlements. Similarly, while a period of less than 12 months of parental leave will not break the continuity of service, an employee will not currently accrue long service leave while on unpaid parental leave.

However, under the LSL Bill, an employee’s employment will remain ‘continuous’ despite taking paid or unpaid parental leave. Any period of paid parental leave and up to 12 months of unpaid parental leave (or other forms of unpaid leave) will count as service and long service leave will accrue during this period. Similarly, any period of paid or unpaid parental leave beyond 12 months will not break the continuity of service, but will not count as service (unless the parties agree otherwise).

  1. Changes to working hours

Under the current LSL Act, where employees change their hours of work during the 12 months immediately before taking long service leave, their normal weekly hours of work for calculating that leave are averaged over the previous 12 months or five years, whichever average number is the greater. However, the LSL Bill provides an additional third option whereby the hours worked are averaged over the full period of continuous employment, and the employee will be entitled to the greater of the three averages.

  1. Application of the LSL Act

The current LSL Act specifies those persons to which the LSL Act applies under s 7. However, this provision is often the subject of disputes, given its complexity and complicated construction.

The LSL Bill clarifies those employees who are not covered by the provisions of the LSL Act, including those who are entitled to long service leave under a Victorian Act other than the LSL Act.

While it is unfortunate that the opportunity has not been taken to amend other provisions with historically problematic wording, the reforms will nevertheless clarify a number of issues that employers face when interpreting the provisions of the current LSL Act.

If you would like more information or advice as to how these reforms might impact your business, please contact a member of our Employment, Safety & People team.

Authors
Meredith Kennedy | Senior Associate
T +61 3 9258 3518
E meredith.kennedy@maddocks.com.au
  Katherine Southwell | Lawyer
T +61 3 9258 3311
E katherine.southwell@maddocks.com.au

Following the second reading of the Long Service Leave Bill 2017 (Vic) (LSL Bill) on 24 August 2017, long service leave in Victoria is set to become more flexible and easier to access for employees.

If it gains the necessary support in the Victorian upper house, the LSL Bill will amend how the current Long Service Leave Act 1992 (Vic) (LSL Act) operates in a number of ways. The suite of reforms include the following key amendments:

  1. Allowing employees to take LSL after seven years

The current LSL Act provides employees with a pro rata long service leave entitlement after seven years of service. While an employee may have long service leave paid out if their employment ceases after seven years, the right to take long service leave currently only arises after 10 years of continuous service.

However, the LSL Bill allows employees to take leave after seven years of continuous service with one employer.

  1. Allowing employees to take LSL one day at a time

The current LSL Act states that long service leave must be taken in one period. However, if an employer and an employee agree, an employee may take the first 13 weeks of leave in two or three separate periods, and may take any further leave to which he or she becomes entitled in two separate periods.

The LSL Bill, however, allows employees to take long service leave one day at a time, provided that the employer and employee agree. This is aimed at providing employees with greater flexibility, particularly for those transitioning to retirement.

  1. Treatment of parental leave

Under the current LSL Act, where an employee takes more than 12 months parental leave, this will break their continuity of service and they will lose any accrued long service leave entitlements. Similarly, while a period of less than 12 months of parental leave will not break the continuity of service, an employee will not currently accrue long service leave while on unpaid parental leave.

However, under the LSL Bill, an employee’s employment will remain ‘continuous’ despite taking paid or unpaid parental leave. Any period of paid parental leave and up to 12 months of unpaid parental leave (or other forms of unpaid leave) will count as service and long service leave will accrue during this period. Similarly, any period of paid or unpaid parental leave beyond 12 months will not break the continuity of service, but will not count as service (unless the parties agree otherwise).

  1. Changes to working hours

Under the current LSL Act, where employees change their hours of work during the 12 months immediately before taking long service leave, their normal weekly hours of work for calculating that leave are averaged over the previous 12 months or five years, whichever average number is the greater. However, the LSL Bill provides an additional third option whereby the hours worked are averaged over the full period of continuous employment, and the employee will be entitled to the greater of the three averages.

  1. Application of the LSL Act

The current LSL Act specifies those persons to which the LSL Act applies under s 7. However, this provision is often the subject of disputes, given its complexity and complicated construction.

The LSL Bill clarifies those employees who are not covered by the provisions of the LSL Act, including those who are entitled to long service leave under a Victorian Act other than the LSL Act.

While it is unfortunate that the opportunity has not been taken to amend other provisions with historically problematic wording, the reforms will nevertheless clarify a number of issues that employers face when interpreting the provisions of the current LSL Act.

If you would like more information or advice as to how these reforms might impact your business, please contact a member of our Employment, Safety & People team.

Authors
Meredith Kennedy | Senior Associate
T +61 3 9258 3518
E meredith.kennedy@maddocks.com.au
  Katherine Southwell | Lawyer
T +61 3 9258 3311
E katherine.southwell@maddocks.com.au