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Proposed major changes to long service leave laws in Victoria

On 24 August 2017, the second reading of the Long Service Leave Bill 2017 (Vic) (LSL Bill) was moved in the Victorian Legislative Assembly. The Bill will provide for easier access by employees to long service leave and more flexible long service leave options in Victoria.

Katherine Southwell, Maddocks Lawyers

If it gains the necessary support in the Victorian upper house, the LSL Bill will amend how the current Long Service Leave 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 7 years

The current LSL Act provides employees with a pro rata long service leave entitlement after 7 years of service. While an employee may have long service leave paid out if their employment ceases after 7 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 7 years of continuous service with one employer.

2. 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 2 or 3 separate periods, and may take any further leave to which he or she becomes entitled in 2 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.

3. 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).

4. 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 5 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.

5. Application of the LSL Act

The current LSL Act specifies those persons to which the LSL Act applies under section 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.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

More Cleardocs information on related topics

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Lawyer in Profile

Leigh Baring
Leigh Baring
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Qualifications: LLB (Hons), BEc (Hons), Monash University

Leigh is a Partner in Maddocks Tax and Structuring team. Leigh has extensive experience in advising Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.

Leigh regularly provides advice on:

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His advice covers both direct and indirect tax considerations.

Throughout his career, Leigh has been at the forefront in developing tax-effective corporate, trust and superannuation structures.

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