A loyal, hard-working and efficient employee can be one of the most valuable assets in your business and one of the key rewards they are entitled to is long service leave.
Under the Western Australian Long Service Leave Act, employees with more than 10 years of continuous service receive 8.6 weeks of paid leave, with another 4.3 weeks for every subsequent five-year period.
However, long service leave can also become a liability for your business if it is not taken. The good news is that employers do have the right to direct their staff to take long service leave – for example, in Western Australia employers can give one month’s notice of the date from which the leave should be taken.
Here are seven other key tips and tricks when it comes to long service leave entitlements in WA (for information on other states, contact the team at WCA Solutions):
- Long service leave does not need to be taken in one block
Employees can take their leave in two blocks (if they have at least eight weeks of accrued leave). If they have accrued more than 19.5 weeks of long service leave then the employee can take leave in up to four blocks.
- The leave can be cashed out
Employees have the right to request some or all of their long service leave be cashed out. Both you and your employee have to come to a written agreement and employees cannot be cashed out in advance of them completing their service.
- The 10 years does not include periods of leave without pay
If your employee takes a year of unpaid parental leave before returning to their former position, then that year does not count towards their period of service. ie. they will be entitled to their long service leave 11 years after they started with the business.
- If you bought an existing business and retained staff from the previous owner, their service for the previous owner still counts
John purchased an existing business in 2016 and retained three key staff in their roles, including Sarah who had started with the business in 2007. Because Sarah has worked for the same business continuously for 10 years, she is still entitled to long service leave in 2017, despite the change of ownership.
- Your employee can’t work for a competitor while on long service leave
As your staff member is still employed by you while on leave, they cannot undertake any work in replacement for their usual job with you. If you do discover your employee is undertaking similar work then you have the right to withhold any leave payments and also reclaim any wages for the period already taken.
- Letting too much time pass without discussing leave entitlements can be dangerous
Steve was entitled to long service leave on 1 August 2016. However, things are busy at work and neither he nor his boss Jane discussed when or how he will use his entitlement. On 2 October 2017, Steve announces he will take his 8.6 weeks of long service leave from 16 October 2017. As more than 12 months has passed since Steve accrued his leave, Jane cannot legally refuse his request with the required two weeks’ notice
- You keep paying them their ordinary pay while they’re on leave
You don’t pay overtime payments, penalty rates and allowances while your staff member is on long service leave. Full time employees receive their ordinary rate of pay, while part time or casual employees are entitled to their ordinary pay for the average weekly number of hours they have worked during their employment with your business.