On 8 May 2018, the Victorian Parliament repealed the Long Service Leave Act 1992 (Vic) (Current Act) and passed the Long Service Leave Act 2018 (Vic) (New Act). The New Act introduces key changes to Victorian employees’ long service leave entitlements including long-awaited reforms which are more favourable for parents.

The key changes are outlined below:

  • long service leave entitlements under the Current Act crystallise after an employee has attained 10 years’ ‘continuous employment’ without any ability to take long service leave before that time, although a pro-rata entitlement is payable to an employee on termination in some circumstances after seven years’ ‘continuous employment’. Under the New Act, however, on completing seven years’ ‘continuous employment’, employees are entitled to take an amount of leave on ordinary pay
  • the New Act also introduces changes to the threshold requirement of ‘continuous employment’ by counting, as service, a period of paid or unpaid parental leave of up to 12 months (or longer if agreed by the parties). This change will be well received given community concerns about parents, particularly women, being disadvantaged under the Current Act as a consequence of taking parental leave. By comparison, in New South Wales a period of ‘leave’ does not count towards, but does not break, ‘continuity of service’. Likewise in Queensland the same position applies with respect to a period of ‘unpaid leave’. At this stage there is no indication as to whether other States/Territories will adopt the more favourable Victorian approach
  • under the Current Act, if an employee is dismissed and is re-employed within three months then continuity of service is not broken. However this is not the case if the employee resigns. Under the New Act, however, if there is a termination of employment at the initiative of either the employer or the employee and the employee is re-employed within three months, continuity of service is not broken
  • under the New Act employees will also be entitled to take long service leave one day at a time, compared to the Current Act which provides that employees are only allowed to take long service leave in longer blocks. An employer must grant the request unless it has ‘reasonable business grounds’ for refusing it
  • under the New Act, powers of authorised officers will be expanded to require compliance with investigative requests and to issue notices requiring production of information or documents.

The New Act is expected to become law on 1 November 2018 (unless proclaimed earlier) and will not apply retrospectively.

Before this time, employers can prepare for the changes by:

  • reviewing and updating payroll systems to ensure long service leave accruals include periods of parental leave
  • train managers and supervisors on the changes to ensure they appropriately respond to requests for long service leave
  • ensure ongoing compliance by auditing long service leave records.

Employers ought be aware that penalties for a body corporate for failure to pay long service leave will increase to 60 penalty units (currently being $9,514.20). Compliance with these legislative amendments is therefore critical.