Long Service Leave in Western Australia

Long service leave is a paid entitlement for employees who have long term continuous employment with the same employer.

Who does long service leave apply to?

The long service leave scheme in WA is governed by the Long Service Leave Act (LSL Act).  The LSL Act applies to off-site building industry employees only, such as office workers and employees based solely in workshops.

It does not apply to employees who engage in on-site construction work, who are covered under the portable paid long service leave scheme.

How much long service leave is an employee entitled to?

The long service leave entitlement for full time, part time and casual employees is:

• 8.667 weeks of leave on ordinary pay after 10 years of continuous employment with the same employer
• 4.333 weeks of leave on ordinary pay for every 5 years of continuous employment with the same employer, following the initial 10 years continuous employment.

This entitlement is based on the employee’s ‘normal weekly number of hours’ over their period of continuous employment.  If an employee is casual, their normal weekly number of hours is taken as the average weekly number of hours worked over the period of employment.

If the employee’s employment ends after 7 years of continuous employment, the employee will be entitled to receive payment for pro rata long service leave.

What is ordinary pay?

Ordinary pay is the rate of pay to which an employee is entitled for ordinary hours of work. For the purposes of long service leave under the LSL Act, the ordinary rate of pay will not include overtime, penalty rates, allowances or similar payments.

Where the employee is casual, their ordinary pay will include casual loading.

Will periods of leave and absences from work affect the accrual of long service leave?

There are some absences or interruptions to an employee’s employment that do not break an employee’s continuous employment.  However, they will not count towards the employee’s period of employment for the purposes of accruing long service leave.

Examples include:

• unpaid leave
• a period between
  • employer terminating the employee’s employment and
  • re-employing them within 2 months, or 6 months if the reason was due to reduced turnover
• stand down periods
• time between termination and reemployment in the process of a business transfer
• absences related to an industrial dispute, subject to the terms of settlement and
• where authorised by the employer which are not listed above as counting as part of an employee’s period of continuous employment.

Can employees cash out long service leave?

An employer and employee can agree for the employee to forgo all or part of the employee’s long service leave entitlement if:

• the benefit in lieu of the entitlement is adequate and
• the agreement is in writing, signed by the employer and employee. 

For the benefit to be considered adequate, the employee must be paid at least the amount of ordinary pay they would have received had they taken all or part of the leave.

It is important to note that long service leave cannot be cashed out before the entitlement has accrued.

What happens when business ownership changes?

From 20 June 2022, when a business changes ownership, an employee’s period of continuous employment with the old employer transfers to the new employer and the employee’s accrued leave, if any, is also transferred.

This means an employer who buys a business will take on the long service leave obligations for existing employees. This applies regardless of anything written in a sale of business contract.

The above is intended to provide general information in summary form. The content does not constitute specific advice and should not be relied upon as such. Formal advice should be sought by members and customers with respect to particular matters before taking action.