From 1 November 2018, some key changes to the long service leave (LSL) legislation commenced in Victoria.
These changes provide more opportunities for employees to be entitled to claim LSL and brings Victorian legislation more in line with other jurisdictions.
The changes that apply for employees and associated businesses are as follows:
- 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 employers due to this type of takeover or merger, they will not lose their LSL entitlements.
To ensure a successful transition to the new legislation, the following actions by employers are recommended:
- 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.
Please contact Integrity One if we can assist you with this or any other business or financial matter.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser before making decisions using this information.