Key Changes Made To The Long Service Leave Act

New amendments to the Long Service Leave Act 1958 (WA) (LSL Act) came into operation in Western Australia on 20 June 2022.

The changes have clarified and brought certainty to a number of issues which in the past have been open to various interpretations, were contentious and sometimes subject to litigation.

Key changes

In summary, these changes to the LSL Act:

• clarify that “casuals” and “seasonal workers” are entitled to long service leave;
• clarify which absences do not break an employee’s continuous employment;
• introduce increased flexibility in how long service leave is taken;
• clarify the provisions about the cashing out of long service leave;
• replace “transmission of business” with the more broadly-defined ”transfer of business” term;
• introduce new record keeping requirements; and
• introduce stronger enforcement provisions and higher penalties.

“Casuals” and “seasonal workers”

The definition of “employee” has been amended to now specifically include casual and seasonal employees, thus removing any doubt that these types of employees have an entitlement to long service leave.

Absences and continuous employment

This amendment recognises the transient nature of some employment relationships. An unpaid absence will now not break an employee’s continuous employment if the absence, irrespective of its duration, is:

• under the terms of an employee’s employment contract;
• due to seasonal factors, for instance working at a summer amusement park; or
• due to the regular systematic nature of the employment, if there is a reasonable expectation the employee will return to work.

In addition, an employee will have continuous employment with their employer even if:

• the employee is employed by the same employer under two or more separate contracts; or
• the employee is also employed by another person during their period of employment with their employer.

Whilst these absences will count towards the length of service for calculating long service leave entitlements, the actual amount of long service leave for a casual or seasonal employee will be based only on the average hours worked during the period of employment.

Increased Flexibility

Under the new provisions of the LSL Act, there is increased flexibility in the manner in which long service leave may be taken.  No longer is the employee required to take the full leave entitlement at one time.  An employee and employer may now agree on the period of long service leave to be taken by the employee at the time (e.g. single days or weeks).

An employee can also request that the employer grant them long service leave on either:

• half pay for a greater period of time (e.g., half pay for 16 weeks); or
• on double pay for half the period of time (e.g., double pay for 4 weeks).

Cashing out

A new provision has been included in the LSL Act that states that the employer and employee may not make an agreement for cashing out long service leave before the long service leave entitlement has been accrued. In other words, the agreement may only be made after 10 years of continuous service.

Transfer of Business

The “transmission of business provisions” have now been replaced with the broader “transfer of business” definition from the Fair Work Act 2009 (Cth). This expands the scope of when an employee’s service will transfer to a new employer and includes insourcing and outsourcing arrangements, as well as an employee working for related companies.

Record Keeping

The amendments expand the type of records which an employer is required to keep in respect of long service leave. They now include:

• the employer’s name and ABN (if any);
• the date of any transfer of business during the employment of the employee;
• weekly hours worked by the employee; and
• details of any leave foregone under an agreement to cash out the long service leave.

Penalties
Contraventions of the LSL Act now attract the same penalties as contravention of other minimum standards of employment entitlements.  This has resulted in a significant increase in the penalties for a breach of the LSL Act.  An employer faces a penalty of:

• up to $130,000 for a serious contravention by an individual; and
• up to $650,000 for a serious contravention by a body corporate.

Lavan Comment

Whilst the changes to the LSL Act may not be significantly onerous on many employers, they may affect the way some employers treat long service leave entitlements, particularly in industries that have traditionally operated with commission-based remuneration.  

The cashing out of long service leave in lieu of the entitlement being taken by mutual agreement between the employee and employer made in advance of the entitlement accruing is a practice that has long been the subject of contention. However no definitive ruling by a tribunal or court had been made on this particular aspect.  The amendments make it very clear that this type of cashing out arrangement cannot be entered into until the long service leave entitlement has actually accrued in time.

The amendments provide an opportunity for employers to review their business structures, processes, and employment agreements, and to have a clearer understanding of their long service leave obligations.

If you would like to know what effect these changes may have in your workplace, please do not hesitate to contact Lavan’s Employment and Education team