Long Service Leave

THE SECTIONS IN GREEN ARE TAKEN FROM THE LSL BALANCE CALCULATION PAGE https://inform.megabus.com.au/display/marlininform/HR+Long+Service+Leave+Balance+Calculation

Full time, part time, casual and seasonal employees all accrue long service leave.

However, the LSL Act does not apply to employees who are covered by a federal award or workplace agreement (individual or collective) where that award or agreement contains its own long service leave provisions.

The LSL Act also does not apply to employees who have their long service entitlement provided by another act or regulation, such as workers in building and construction, where it is provided by the CoINVEST scheme.

Call Fairwork on 13 13 94 for more details.

Warning

Different States and Awards etc may have different rules as to when an employee is entitled to take long service leave or how much unused long service leave they are entitled to be paid for upon termination etc.

You should always consult your employer organisation before processing an employee's termination pay to confirm exactly what payments the employee is entitled to and the amount of each.

When a new employee starts, you can enter LSL as one of their Entitlements in Marlin HR and it will show the employee's Long Service Leave accrual from the first pay. It will also send the LSL accruals across to the General Ledger in the pay journals so that the growing LSL liability can be reflected in the financial reports. The other benefit of adding the LSL entitlement when an employee starts is that you don't need to manually calculate the current LSL balance when you add it later. Termination Pays will not pay out unused LSL unless you tick the 'Pay unused LSL' checkbox when initialising the Termination Pay so you don't need to worry about accidentally paying out LSL to an employee who leaves before he is entitled to it.

Some employers choose not to add the LSL entitlement when new employees start as so few of them stay with the business long enough to become entitled to LSL. They only add it later if an employee does stay long enough and wishes to take some LSL or is being terminated and needs to be paid out for it. In this situation, you will need to manually calculate the current LSL balance when adding the entitlement and enter it as a Leave Balance Adjustment. Shown below is the way to determine the current LSL balance.

How to calculate an employee's current LSL balance

An employee will be entitled to take long service leave after 10 years of continuous employment with one employer (see phasing in arrangement).

The date of commencement of long service leave is to be agreed between the employee and the employer.

An employee ceasing employment after at least seven years of continuous employment with one employer is entitled to be paid long service leave at the accrual rate of one week for each sixty weeks of continuous employment, regardless of the reason for termination of the employment.

To calculate long service leave:

• After 7 years of continuous service, divide the number of consecutive weeks of employment by 60 to get the current entitlement in weeks.
• Then multiply the entitlement in weeks by 38 or 40 (depending on whether the employee works a 38 or 40 hour standard week) to convert it to hours.

Employees are entitled to 8.6667 weeks of Long Service Leave upon providing 10 years of continuous service.

This equates to an accrual of 0.86667 weeks per year which will in turn equate to a different number of accrued hours per year and pay cycle depending upon the employee's standard working week and pay cycle.

So, to work out an employee's LSL balance at any point in time:

• Determine whether they are based on a 38 or 40 hour week (or something else if part time);
• Determine their pay cycle (i.e. paid Weekly, Fortnightly or Monthly);
• Count the number of complete pay periods between their start date and the current date and then:
• Deduct any periods of unpaid leave that do not break the 'continuous service' but do not count towards LSL accrual;
• Deduct any LSL that the employee has already taken as time off;
• Deduct any LSL that has been cashed-in (if permitted);
• Multiply this number of pay periods by the appropriate rate in the table above (i.e. according to their working week and pay cycle).

Alternatively, you could try one of the following online LSL balance calculators:

• https://www.business.vic.gov.au/hiring-and-managing-staff/long-service-leave-victoria/calculatelongserviceleave
• https://www.industrialrelations.nsw.gov.au/employers/nsw-employer-essentials/long-service-leave-calculator/
• http://long-service-leave-calculator.cciq.com.au/
• https://app.safework.sa.gov.au/lsl.html?_ga=2.224587677.606184472.1579563357-585100045.1579563357

How much Long Service Leave is my employee entitled to accrue each year?

Although not entitled to it until they have worked for 7 consecutive years, an employee is entitled to accrue 1 week of LSL for every 60 consecutive weeks they have worked.

This equates to an accrual of 0.866666 weeks per year.

How to add Long Service Leave accrual & balance to an employee

See the information above for the applicable accrual rate and current balance calculation.

Add the Long Service Leave entitlement

You will need to add Long Service Leave as an entitlement on the Entitlements page of Employee Maintenance for the employee.

This tells the system how many hours of Long Service Leave the employee is to accrue for each normal pay run from now on.

Open the employee in Employee Maintenance and select the Entitlements tab.

Click on the +Add button and select Long Service Leave in the Leave Type drop down box.

Change the Annual Entitlement (Hours) figure if necessary (check with your employer organisation if unsure)
Click on OK and then on the Save icon.

Add the current balance (if any):

If this is not a new employee (i.e. you have already performed pay runs for this employee) you will also need to add a current balance by performing a Leave Balance Adjustment on the Leave Entry screen.

Calculate the balance as shown above.

Subtract any Long Service Leave already taken as time off or paid out.

Perform a Leave Balance Adjustment to add the balance to the employee.

When to setup Long Service Leave accrual for an employee

Depending on factors such as the state, awards or employee agreements, an employee may not be entitled to pro rata long service until they have worked for you for say 7 or 10 consecutive years.

Adding the Long Service Leave accrual to a new employee's entitlements has the benefit of calculating their balance from day one but it does mean that the GL will show a growing LSL liability that may never need to be paid (i.e. if the employee ceases employment before being eligible). It does however eliminate the nasty surprise that may occur if you don't add the LSL entitlement to employees and some long term employees cease employment.

An alternative approach is to add the LSL accrual and balance to an employee's entitlements only when they have reached the eligible length of service.

For these reasons, we recommend that you consult your accountant for their advice on when to setup LSL accrual entitlements on employees.

How to process a Long Service Leave request

To process Long Service Leave, create a normal Leave Entry exactly the same as you would for Annual Leave or Personal Leave but select Long Service Leave from the drop down list of Leave Types.

Enter the correct To and From Dates and Total hours before saving the leave entry.

Run the Normal Pay Run as usual and it will pick up the Long Service Leave entry.

Does Long Service Leave accrue Annual and Personal Leave?

Yes.

Long Service Leave is processed using a Normal Leave Entry and Normal Pay Run.

Normal Pay Runs always accrue leave entitlements, Adjustment Pay Runs never do.

Can Long Service Leave be Cashed Out?