Do you pay pro rata long service after 10 years?

Do you pay pro rata long service after 10 years?
By Paul Munro on 9 March 2017 Are employees entitled to pro rata long service leave for time worked beyond 10 years? 

This question was recently sent to our Ask an Expert service.

We have a number of staff that have been with the company for between 10 and 15 years who have already taken their initial entitlement of two months’ long service leave. Two of these employees will be resigning next month and have questioned whether they are entitled to pro rata payment for the long service leave that has accrued since their 10 years’ entitlement. Their additional service would be 13 years and 14 years respectively.

Are they entitled to pro rata long service leave for the three-year or four-year period, or does an additional entitlement to pro rata long service leave only apply after each additional five years, or some other period?  One employee is in New South Wales while the other employee is in Western Australia.

A Generally, once an employee has completed 10 years’ continuous service with an employer, there is an automatic entitlement to pro rata long service leave on termination, with the possible exception when dismissal is due to an employee’s serious and wilful misconduct. How pro rata payment is calculated will depend on the relevant state or territory long service leave legislation.

New South Wales

Under the Long Service Leave Act 1955 [NSW], where an employee has completed at least 10 years but less than 15 years continuous service with an employer, the entitlement on termination is calculated on a pro rata basis, which includes completed years and months of service. In calculating the amount due on termination for service in excess of 15 years, only completed years count.

Once an employee has completed 10 years' continuous service or more, the employee is entitled to pro rata payment of long service leave on termination, irrespective of which party terminates the employment or for what reason.

Western Australia

Under the Long Service Leave Act 1958 [WA], if an employee has already had an entitlement to long service leave there is an entitlement to pro rata long service leave. This is based on eight and 2/3  weeks leave for 10 years’ continuous service for each completed year of employment since last becoming entitled to long service leave. This entitlement is calculated on completed years only.

Other jurisdictions

Australian Capital Territory – the Long Service Leave Act 1976 [ACT] provides that after seven years’ continuous service with an employer, an employee is entitled to pro rata long service leave for each year and month of continuous service calculated on the basis of two months’ for 10 years of continuous service.

Northern territory – the Long Service Leave Act [NT] states that an employee who has completed not less than 10 years’ continuous service with an employer is entitled to payment based on 1.3 weeks’ leave for each year of service.

Queensland – the Industrial Relations Act 1999 [Qld] provides that once an employee has served 10 years' continuous service or more, the payment of pro rata long service leave on termination is based on years and months of service, calculated on two months’ leave for 10 years of service. Transitional calculations apply where an employee commenced work prior to 3 June 2001 and had less than 15 years’ continuous service as at that date.

South Australia – the Long Service Leave Act 1987 [SA] states that pro rata long service leave is calculated on the basis of 1.3 weeks’ leave for each year of continuous service with an employer.

Tasmania – the Long Service Leave Act 1976 [Tas] provides that an employee’s pro rata long service leave entitlement is calculated by dividing the employee’s period of continuous employment by 10 years and multiplying the result by eight and 2/3 weeks. The period of employment includes years, months and days.

Victoria – the Long Service Leave Act 1992 [Vic] provides that an employee is entitled to pro rata long service leave based on one week for every 60 weeks of continuous service with an employer. In the above scenario, this would mean pro rata long service leave is calculated from 10 years’ service till the date of termination, based on the one week per 60 weeks of service formula.

The bottom line: An employee is usually entitled to pro rata long service leave after completing at least 10 years’ continuous service with an employer. Reference should be made to the relevant long service leave legislation to determine the method of calculating any pro rata payment.
 

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