Unpaid parental leave: does long service accrue?

Unpaid parental leave: does long service accrue?
By Paul Munro on 6 March 2017 An employee claims that unpaid paid parental leave counts towards long service leave accrual. Is that correct?

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

Q An employee with 10 years' service has resigned after accepting a job with another employer. During the course of her employment, the employee took 12 months’ unpaid parental leave.

The company received advice that the employee is not entitled to long service leave on termination as she has completed only nine years’ service with the company – the period of unpaid parental leave has not been taken into account.

The employee claims there is an entitlement on the basis of 10 years' completed employment with the company. The relevant Queensland long service leave legislation makes no reference to whether unpaid parental leave counts as service for the purpose of accruing long service leave.

Is the employee entitled to payment of long service leave on resigning? As we have employees in other states, what is the situation under other state long service leave legislation with respect to unpaid parental leave?

A The Industrial Relations Act 1999 [Qld] (s71Q) states that a period of unpaid leave does not count as service for the purpose of accruing long service leave. The absence on unpaid parental leave would be considered ‘unpaid leave’ under the Queensland legislation although the absence does not break the employee’s service with the employer. In this case, the employee is deemed to have completed nine years’ service with the employer.

Payment on termination

The Queensland long service leave legislation provides that an employee is entitled to receive proportionate payment of long service leave on termination of employment after completing seven years' continuous service with the same employer under the following circumstances:
  • the death of the employee
  • the employee terminates their employment because of illness or incapacity or domestic or other pressing necessity
  • the employer dismisses the employee for a reason other than the employee’sconduct, capacity or performance, or
  • the employer unfairly dismisses the employee.
In this case, the employee has resigned after less than 10 years' continuous service and consequently does not have an entitlement to pro rata long service leave on termination.

The legislation provides that there is an automatic entitlement to payment of long service leave on termination once an employee has completed 10 years’ continuous service with the employer.

Other states & territories

Generally, in the absence of a specific provision to the contrary, unpaid leave (such as unpaid parental leave) does not usually count as service for the purpose of accruing long service leave, based on the ordinary meaning of ‘service’ as established by precedent case law.

Courts have usually determined that “service” requires the actual performance under the contract of employment, whereas the use of the word “employment” meant an entitlement would subsist for as long as the employee remained employed by that particular employer.

It should be noted there is a specific provision under the Victorian Long Service Leave Act 1992 which defines service to include an absence on paid parental leave, but not unpaid parental leave.

The bottom line: Generally, long service leave will not accrue when an employee is absent on a period of unpaid parental leave, unless otherwise specified by the relevant state or territory long service leave legislation.

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