What does Victoria’s new long service leave law mean for HR?

By Alan J. McDonald

As of 1st of November, Victorian employee entitlements have changed. Legal experts explain what HR needs to know.

The Long Service Leave Act 2018 (Vic) came into effect Thursday 1st November and will introduce significant changes to long service leave (LSL) arrangements in Victoria. The new legislation will impact the entitlements of all Victorian employees who were previously covered by the Long Service Leave Act 1992.

States and territories outside of Victoria should also take notice, because it could affect them too. HRM spoke to legal experts about the new legislation, highlighting the appropriate steps for employers and HR to take.

What’s new?

The biggest change to come from the new Act is that Victorian employees can now request to take LSL after seven years of service on a pro rata basis – whereas they were previously only able to access this leave at the ten year mark. It should be noted that employers and employees are also able to negotiate taking LSL in advance (prior to the seven year point). The ten year threshold remains for all other states and territories.

McDonald Murholme principal lawyer Trent Hancock says that employers should ensure they are across the reformed Act as it applies to a large proportion of the workforce.

“The changes apply to all full time, part time and any casual employees who accrue LSL,” he says.

Employers cannot refuse a worker’s LSL request unless they have reasonable business grounds to do so. An example of “reasonable grounds” to refuse a request would be if it significantly impacted customer service.

“For example, the business may have made an important commitment to a particular customer or client that cannot be fulfilled if the employee takes LSL. Reasonable business grounds will also arise if there is no capacity to change the working arrangements of other employees to accommodate the employee taking LSL at the requested time,” says Hancock.

Breaches to the new Act can carry severe penalties. Hancock says the penalties will vary depending on the type of breach, but most will incur “12 penalty units for an individual (currently $1,934.28) and 60 penalty units for a company (currently $9,671.40)”.

A win for employees

Under the new Act, continuous service covers employer authorised absences on paid and unpaid leave, including parental leave (up to 52 weeks) which counts toward the period of employment for accrual purposes. Parental leave taken beyond 52 weeks will not count as service but will not break continuity of employment, says senior employment adviser at Employsure Natalie Clark.

When the new law was first announced in May, the Minister for Industrial Relations, Natalie Hutchins, said: “the new LSL laws are a huge win for women, parents and carers across Victoria. No one should be penalised for spending more time at home when their kids are born or for changing their working hours to look after a loved one.”

Victorian employees can now take out LSL for as short as one day.

“Previously, an employee would have to seek out an agreement with their employer to take their leave in shorter periods. [Now], LSL essentially takes on the character of an annual leave entitlement and can be used by the employee as required – provided the employer doesn’t refuse on reasonable business grounds,” Hancock says.

Clark also says that LSL is calculated on the employee’s normal weekly hours at their “ordinary time rate of pay” on the day long service leave starts and that it’s an offence to make payments in lieu of LSL, except where payment is made upon termination.

Why you need to be up to date

Clark clarifies that while this new rule applies to Victorian workers, employers in other states should also take notice because the new rules “also apply to companies who may be based outside Victoria, but have staff employed in Victoria”.

HR managers should ensure their payroll systems are updated to make sure LSL entitlements are correctly calculated and aminisitered.

“Victorian employers and businesses should have their policies and documentation reviewed by an expert to ensure their business is compliant,” suggests Clark. She also says that employers must keep records relating to LSL for at least seven years after the employment ceases.

Hancock believes the changes are good news for all employees affected and thinks that other states and territories should follow suit.

“It provides a new level of flexibility that long-term employees have never had, and which could positively affect their working and personal life,” he says.

Do you think the other states and territories should follow in Victoria’s footsteps? Share your thoughts in the comment section below.

Reference: ‘What does Victoria’s new long service leave law mean for HR?’,  News.com.au, Friday 2nd November 2018.