Long service leave (LSL) is a uniquely Australian concept, and a long-standing entitlement for many Australian employees after a specified period of continuous employment with an employer. Long service leave entitlements vary across Australian states and territories, with Victorian LSL being a commonly discussed topic among our clients, especially since the introduction of the Wage Theft Act in 2020. Here, we discuss VIC long service leave, how employers can ensure they're complying with long service leave entitlements for employees who have met the continuous service requirements, and which regulator might come knocking if employers fail to comply.
Long Service Leave (LSL) - an overview
Generally speaking, LSL entitlements are protected under the Fair Work Act 2009 (FW Act) as part of the National Employment Standards (NES). However, no uniform national entitlement to LSL exists. LSL was legislated by State and Territory governments in the 1950s and has remained a State or Territory entitlement since that time. LSL entitlements can also be included in modern awards or enterprise agreements.
What are the LSL laws in Victoria?
In Victoria, LSL entitlements are governed by the Long Service Leave Act 2018 (LSL Act).
Victoria's LSL Act 2018
Eligible employees in Victoria are entitled to 1.3 weeks of LSL after seven years' service or continuous employment. After that, employees are entitled to an additional 1.3 weeks of leave for every completed year of continuous service.
The LSL Act 2018 includes provisions for the calculation of LSL entitlements, the payment of LSL, and the rights and obligations of both employers and employees in relation to LSL.
Employers have an obligation to maintain accurate data on employees' LSL at all times and to retain them for a period of at least seven years. The FW Act applies to all companies in Australia and requires the retention of employment records and receipts for the payment of employee compensation. The failure to keep documents is punishable under the LSL Act. Contraventions of the LSL Act face significant penalties.
Introduction of the Wage Theft Act in VIC
In 2020, Victoria introduced the Wage Theft Act to combat the widespread failure by employers to ensure compliance with payroll obligations. The Wage Theft Act is designed to make it a criminal offence for employers to deliberately underpay their workers or fail to pay their workers their full entitlements. The Act also provides for significant financial penalties for employers who engage in wage theft.
The Wage Theft Act and the LSL Act work together to provide important protections for Victorian employees and are both important pieces of legislation in Victoria's efforts to ensure that employees are treated fairly and equitably.
Which regulator is responsible for ensuring compliance with LSL entitlements in Victoria?
In most states and territories around Australia, the Fair Work Ombudsman is responsible for investigating and enforcing employee entitlements, including LSL. However, in Victoria, with the introduction of the Wage Theft Act, the Wage Inspectorate Victoria (WIV) was established to investigate employee entitlement offences and bring proceedings relating to such offences. Relevantly, the WIV is responsible for investigating compliance with LSL obligations.
What is the WIV?
Since its inception, the WIV has investigated and commenced proceedings against large corporations for failure to pay the correct LSL entitlements. Employers are liable to pay penalties for such breaches, and directors may also be personally liable where they knew about the conduct and were reckless as to whether the conduct engaged in was in breach of the LSL Act.
Recent proceedings by the WIV serve as a timely reminder for employers to ensure they are correctly calculating and paying their employees’ LSL entitlements correctly.
How can employers ensure ongoing LSL compliance?
Employers have a legal obligation to provide LSL to eligible employees after a certain number of years of continuous employment, depending on the state in Australia. They must ensure that they calculate LSL and pay it correctly, and that LSL employee entitlement records are kept accordingly.
Yellow Canary can help with LSL Compliance. Get in touch to find out more.
*Yellow Canary content on this website is intended solely for the purpose of offering commentary and general knowledge. The content is not intended to constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.
