In Australia, most employees, including part-time and full-time workers, are eligible for Long Service Leave (LSL) if they have worked with the same employer continuously over a period.
It can be a challenge for employers, however, to understand whether casual employees—who often have irregular schedules—are also entitled to LSL. In this blog, we will explore how LSL applies to casuals and what employers need to know across different states.
Are casual workers entitled to Long Service Leave?
Casual employees may qualify for LSL in most states if they show "continuous service"—working without a formal employment break, even if there are gaps due to seasonal work or other factors. Although breaks in work often do not count toward LSL accrual, they generally do not break continuous service. Each state, however, has its own interpretation of continuous service.
How Long Service Leave applies to casual workers across states
- Victoria: Casuals are eligible for LSL if they work regularly for seven years. Breaks due to lack of work do not affect continuity but do not count toward LSL accrual. For example, if a casual employee works for eight years but takes a 28-week break, they maintain continuity but only accrue LSL for the active employment period.
- New South Wales (NSW): Casuals with a regular work pattern qualify under the Long Service Leave Act 1955 after 10 years. Breaks under three months typically do not impact continuity, but they do not contribute to accrual. For example, if an employee has worked for 13 years but took breaks of three to six months, they may still qualify for LSL if they returned to regular employment after each break without termination.
- Queensland: Eligibility for LSL requires casual employees to work for 10 years. While breaks due to unavailable work do not break continuity, they also do not count toward accrual. This means casuals who experience inconsistent work patterns may end up with a lower overall entitlement, despite maintaining continuity. Employers in Queensland should carefully monitor the reasons for any work breaks to ensure clarity regarding the employee’s ongoing employment status.
- Western Australia: Casual employees become eligible to take LSL after 10 years of continuous, regular employment. As with other states, breaks do not break continuity but do pause the accrual of LSL. For instance, if a casual employee takes a six-month break due to a lack of available work, their LSL accrual is paused, but continuity remains intact. In addition, casual employees may have entitlement to payment of LSL after seven years of continuous employment when they resign, are dismissed, made redundant or pass away.
Key questions for employers to determine LSL entitlement for casual workers
To determine a casual employee’s LSL eligibility, consider:
- Does the applicable award, enterprise agreement, or contract include specific provisions for casual employees’ long service leave entitlements?
- Has the employee worked for the required number of years to qualify for long service leave under the state legislation?
- Has the employee worked on a regular and systematic basis throughout their employment?
- Are there significant breaks in service, and are these breaks considered breaks in service under the relevant laws?
- How should the employee’s average hours be calculated to determine their entitlement?
- Is the employee entitled to a pro-rata payment for long service leave due to resignation, dismissal, or other valid reasons?
Calculating Long Service Leave for casual employees
Once a casual employee is confirmed eligible for Long Service Leave (LSL), calculating the correct leave amount and payment can be complex.
In Victoria, casuals accrue one week of LSL for every 60 weeks of continuous service, while in New South Wales, it is one month for every five years. It is important for employers to calculate LSL based on each employee's active work periods since LSL accrues based on total active service only, excluding periods with no work.
Casual loading, which is generally paid at “ordinary pay” also needs to be factored into LSL calculations to reflect both the normal hourly rate and additional loading. Given the complexities of tracking service breaks, it can be challenging to determine the exact amount owed. Casual employees may also be entitled to payment for any unused LSL, adding further complexity.
Calculating Long Service Leave (LSL) is complex, requiring employers to stay on top of all conditions, state-specific requirements, and nuances to ensure compliance.
Practical steps for managing casual LSL compliance
To manage LSL entitlements, employers should:
- Document all breaks and reasons, noting if breaks were due to unavailable work.
- Regularly confirm the employment status with employees, particularly during long breaks, to ensure continuity.
- Use tools from state governments like Business Victoria’s LSL calculator to estimate eligibility and accruals, especially for long-tenured casuals.
- Keep up with state-specific LSL rules to ensure compliance when paying casual workers.
- Consider utilising an independent review technology to continuously monitor compliance of balances and payments.
Automating long service leave compliance checks and calculations
With increasing public scrutiny on underpayments by large companies, reputation risk management has become a top priority for boards. These cases often expose deep-rooted, systemic issues with significant financial implications, and LSL is emerging as the next area of concern if businesses do not take proactive steps.
Navigating LSL can be challenging without the right support or resources. However, with the right guidance and technology, LSL compliance does not have to be stressful.
Yellow Canary has developed a Long Service Leave compliance tool that automates compliance reviews, calculating LSL balances and payments according to state legislation and enterprise agreements for casual workers.
