In the case of Long Service Leave, some State Awards simply refer to the relevant State legislation -The Long Service Leave Act (WA) 1958, for the entitlement and some contain a more generous provision. Often there is no explanation of how the entitlement might otherwise be provided. In the Federal system the Modern Awards refer to the NES which in turn refer to the applicable State provisions, it is therefore necessary to go directly to the Long Service Leave Act to get more information about what options might be available.
In Part II Section 5 ‘Limiting contracting-out of long service leave’, the Act states:
An employer and an employee may agree that the employee may forgo his entitlement to long service leave under this Act if –
a) The employee is given an adequate benefit in lieu of the entitlement; and
b) The agreement is in writing.
This means that by written agreement between both the employer and employee, an employee can ‘cash-out’ their Long Service Leave as long as they receive no less payment than they would have received had they taken the leave. The important part is that it must be by mutual agreement and both parties would be wise to keep very accurate and clear records of both the agreement and the transaction. Of course in the case of the employer – it is a legal requirement to keep accurate employment records. It would also be prudent for the employee to seek financial advice and to look into any tax implications of taking a lump sum payment.
Additionally it is a good idea to have notification and application requirements similar to any you may have in place with regard to the approval of annual leave such as, for example, written application with a minimum of 6 weeks notice. A request to take LSL may not ‘unreasonably’ be refused but it is the job of Policy to clearly spell out any operational requirement in this respect. There is provision in the Ac,t where agreement cannot be reached between an employer and an employee and where the entitlement to LSL has been in place for more than 12 months, for the employee to provide two weeks notice of an intention to take their LSL.
Unless more generous provisions apply, the entitlement after 10 years continuous service is for eight and two thirds weeks paid leave – don’t forget that casual employees also have entitlement to LSL, there is still widespread belief that they don’t and this can lead to some nasty surprises for the uninformed employer.
Not sure of your obligations? Call us to discuss on 9792 4451.