Pro-Rata Long Service Leave Explained in Australia

Long service leave provides two months of paid leave after ten years with the same employer. It recognises long-term contributions. Pro-rata long service leave allows early access to part of the entitlement. This applies if employment ends before ten years of service. It also applies proportionately for employees with service between ten and fifteen years.

The Long Service Leave Act 1955 (NSW) (LSL Act) and the Fair Work Act 2009 (Cth) (FW Act) outline the conditions under which pro-rata long service leave may be payable. These laws ensure compensation for employees in certain circumstances.

• Termination Between 5 and 10 Years

Employers must provide pro-rata long service leave to employees in New South Wales terminated after five but less than ten years of service. They calculate the leave based on two months for ten years of service, adjusted to the employee’s actual service period. Employers must grant this leave unless the termination results from the employee’s serious and wilful misconduct. It also applies if they leave due to illness, incapacity, urgent personal reasons, or if they pass away.

• Termination Between 10 and 15 Years

Employees who complete at least ten but less than fifteen years of service can access pro-rata long service leave. Employers must provide this leave if employment ends for any reason. The entitlement is proportionate to the employee’s total years of service. In this case, the calculation is based on three months of leave for fifteen years of service, with the entitlement adjusted proportionally to the employee’s total years of service. This ensures that employees with more than ten years of service are recognised with an appropriate entitlement, even if they do not reach the fifteen-year mark.

Employer Obligations and Non-Compliance

Employers are required to make payments for long service leave in accordance with the LSL Act and FW Act. It is a civil penalty provision under the Fair Work Act not to fail to pay an employee their entitlements, meaning that the employer’s failure to comply will expose them to legal proceedings, including those brought before the Federal Circuit and Family Court of Australia.

Calculating Long Service Leave Entitlements

For further guidance on calculating entitlements, the NSW Government provides a Long Service Leave Calculator. This tool helps employees and employers calculate long service leave in various scenarios. An employee with 5.5 years of service from 1 January 2019 to 30 June 2024 would accrue 4.7619 weeks of pro-rata long service leave.

Conclusion

Pro-rata long service leave ensures employees are fairly compensated for their service when employment ends before full entitlements are reached, reflecting the protections under the LSL Act and FW Act.

If you require legal advice or want to discuss the article, contact our team at Jake McKinley. Please contact us on (02) 9232 8033, office@jakelaw.com.au, or at https://jakelaw.com.au/contact/ to make an inquiry.