Is pro rata long service leave payable if you resign?

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Is pro rata long service leave payable if you resign?

If an employee resigns after seven years of continuous service, is she entitled to pro rata long service leave? Paul Munro explains.

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If an employee resigns after seven years of continuous service, is she entitled to pro rata long service leave?

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Q An employee has tendered her resignation by giving the required four weeks’ notice. She has completed seven years' continuous service with the company, which is located in Western Australia.

The employee has asked what payments she will receive in her termination pay. She believes she is entitled to payment of pro rata long service leave. The company presumed no payment applies as the employee resigned.

Is an employee entitled to pro rata long service leave when resigning from their position?

A An entitlement to pro rata long service leave on termination is usually determined by the relevant state or territory long service leave legislation.

WA legislation

Under the Long Service Leave Act 1958 [WA] (s8(3)) an employee who has completed at least seven years but less than 10 years continuous service with an employer – and is terminated for any reason (other than serious misconduct), or the employee dies – is entitled to receive a pro rata amount of long service leave calculated on the basis of 8 2/3 weeks leave for 10 years' continuous service.

This means the employee is entitled to pro rata long service leave on the date of their resignation.

Other jurisdictions

The following is a summary of the entitlement to pro rata long service leave when an employee resigns having served less than 10 years’ continuous service with an employer.

Australian Capital Territory: the Long Service Leave Act 1976 [ACT] states that an employee who has served at least five years but less than seven years’ continuous service with an employer is entitled to payment of pro rata long service leave on termination of employment if:
  • an employer terminates for any reason other than serious misconduct
  • an employee resigns due to illness or incapacity or a domestic or other pressing necessity
  • an employee resigns having attained the minimum retirement age, or the employee’s death. 
Once an employee has served seven years' continuous service or more with an employer he/she is entitled to payment of accrued long service leave, regardless of the reason for termination.

New South Wales: the Long Service Leave Act 1955 [NSW] states that an employee who has completed at least five years but less than 10 years' continuous service with an employer is entitled to pro rata long service leave on termination if terminated by the employer for any reason other than serious and wilful misconduct; employee resigns due to illness or incapacity or a domestic or other pressing necessity, or the employee’s death.

An employee who resigns to accept employment with another employer would not be entitled to pro rata long service leave on termination if they have served less than 10 years with the employer.

Northern Territory: the Long Service Leave Act [NT] provides that if an employee resigns from their job and has less than 10 years’ service, there is no entitlement to a pro-rata payment for long service leave. Where an employee has completed at least seven years’ but less than 10 years’ continuous service with an employer the employee is entitled to pro rata long service leave if the employee has attained retirement age; the employer terminates for any reason other than serious misconduct, or the employee resigns due to illness or incapacity or a domestic or other pressing necessity.

Queensland: the Industrial Relations Act 1999 [Qld] provides that an employee is entitled to receive pro rata long service leave after seven years’ continuous service with the employer if: the employee dies; the employee resigns due to illness or incapacity or a domestic or other pressing necessity; the employer dismisses the employee for a reason other than the employee’s conduct, capacity or performance; or the employer unfairly dismisses the employee.

Resignation to work for another employer would not qualify the employee for payment of pro rata long service leave on termination of employment.

South Australia: the Long Service Leave Act 1987 [SA] provides that an employee is entitled to receive proportionate payment of long service leave on termination of employment after having completed between seven years and 10 years of continuous service with the employer, provided the employee lawfully leaves their employment or the employee was not terminated by the employer for reasons of serious misconduct.

Tasmania: the Long Service Leave Act 1976 [Tas] provides that an employee who has completed at least seven years continuous employment is entitled to a pro rata payment if employment is terminated by the employer for any reason other than serious and wilful misconduct, or if the employee terminates their employment because illness, incapacity or domestic or other pressing necessity.

An employee is also entitled to pro rata payment if the employee attains the age for retirement, or on the death of the employee. There is no entitlement if the employee resigns to accept work with another employer.

Victoria: the Long Service Leave Act 1992 [Vic] provides that on the day that employment ends an employee with at least seven years' continuous service with an employer is entitled to receive payment for any untaken long service leave. This will apply whether the employee has resigned, has had their employment terminated by the employer, has been made redundant, or has died.

An employee ceasing work with at least seven years' continuous employment is entitled to be paid long service leave at the standard accrual rate of one week for each 60 weeks of continuous employment, regardless of the reason for termination.

The bottom line: Whether an employee is entitled to pro rata long service leave after seven years' continuous service is usually subject to the terms of the relevant long service leave legislation.
 

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