Long service leave applies to most NSW employees who are full-time, part-time or casuals. Employees who have been working for the same employer for 10 years are entitled to 2 months (8.67 weeks) paid leave, to be paid at the employee’s ordinary gross weekly wage under the NSW Long Service Leave Act 1955 (the Act).
The Act also provides for a pro-rata entitlement after five years, if the employee resigns as a result of:
- incapacity or
- domestic or other pressing necessity
If an employee resigns for one of the above reasons they need to advise the employer in writing at the time of giving notice. The Act also provides for a pro-rata entitlement after five years, if an employee’s services have been terminated by the employer for any reason other than serious and wilful misconduct, or if the employee dies. If an employee ceases employment before 5 years service there is no entitlement for long service leave.
For long service leave (LSL) purposes, ordinary pay is calculated as the higher of:
- Ordinary pay for the last pay period prior to leave being taken, and
- Average weekly ordinary rate of pay earned during the previous 5 years
Ordinary pay does not include payments made in respect of shift work, overtime or other penalty rates. Work related allowances which are skill related, (e.g. leading hand allowance, site allowance, first aid allowance) are included in ordinary pay. Expense allowances, (e.g. car allowance, meal allowance, living away from home allowance) are not included in the calculation of ordinary pay.
Bonuses and commissions received by the employee are averaged over the previous 12 months (or averaged over the previous five years if the five year average pay rate is used) and added to the weekly rate used to calculate the leave payment. However, bonuses paid to workers who are otherwise paid in excess of $145,400 annually are not included.
Ordinary pay for employees who are paid other than in relation to a fixed pay rate, will be the higher of their average weekly wage earned during the prior 12 months or 5 years prior to the leave being taken. Calculation is based on total service (Years, Months and Days) up to 15 years, then only completed years thereafter.
If you have a query regarding long service leave and require assistance, please contact one of our payroll experts on (02) 9223 9166 to discuss. Alternatively, you can submit an online enquiry form.