February 11, 2022   |   Compliance

What are the amendments to the Long Service Leave Act in WA?

The Long Service Leave Act 1958 (LSL Act) in Western Australia will soon be updated with several amendments.  

The amendments will bring in more straightforward language and clarification on the terms of employment. 

While no set date is confirmed, the amendments will be introduced in early 2022 and are stated within the Industrial Relations Legislation Amendment Act 2021.   

The term “employee” has been expanded 

While entitled to Long Service Leave (LSL) under the LSL Act, casual and seasonal employees are not explicitly stated within the definition of an “employee” in the LSL Act. 

The definition of “employee” will be expanded with the upcoming amendments to expressly state the inclusion of casual and seasonal employees. 

Additional clarification on absences and their impact on “continuous employment” 

Amendments are being added to define the types of absences that will count towards an employee’s continuous employment, offering greater clarity and flexibility. For example, paid and unpaid parental leave will both fall within this category.  

Items have also been considered for absences that can directly impact casual and seasonal based employees. 

Under the forthcoming amendments, the following scenarios will fall under an employee’s continuous employment. 

  • An absence under the terms of an employee’s employment arrangement; 
  • An absence due to seasonal factors; and 
  • An absence due to the nature of the employment, and there is a reasonable expectation that the employee will return to work. 

LSL, ordinary pay, and casual and seasonal employees 

While casual and seasonal employees are generally not entitled to annual leave and paid personal leave, employers need to be aware this may not be the case for LSL.  

Under the Long Service Leave Act 1958 (WA), casual and seasonal workers are entitled to LSL if they have 10 years of continuous employment with the same employer. 

A casual or seasonal employee with the required period of continuous employment may be paid LSL on ordinary pay. If an employee’s regular weekly hours have changed, which is typical for casual and seasonal employees, their normal weekly number of hours is the average weekly hours worked during the qualifying period. Where the employee has not worked any hours, these periods may need to be included when calculating the employee’s ordinary pay for long service leave purposes. 

Employers should:  

  • Review the terms of their casual and seasonal employees to identify any terms covering casual or seasonal workers 
  • Review absence clauses caused by seasonal factors due to regular or systematic nature of employment       
  • Review if any long-standing casual and seasonal employees are likely to or have accrued continuous employment to qualify for LSL

LSL, ordinary pay and employees paid by results 

Several amendments have been made in the LSL Act for employees paid by commission, bonus, piece rates, or any other system of payment by results. 

For these types of employees, the rate of pay for periods of LSL is to be calculated from their “average weekly rate of pay” over a specified reference period.  

The following clarifications are being added for employees paid by results. 

  • Reference period: The reference period for the average weekly rate of pay calculation is being changed from 12 months to 365 days and excludes any periods of unpaid leave and stand down. The reference period or the 365th day ends the day immediately before the day the employee takes leave, or if cashing out, the day a written agreement is reached. 
  • All results-based employees: Regardless of whether an employee is wholly or partly compensated by results, they will fall into the “paid by results” category. 

When an employee can take LSL  

Increased flexibility is being introduced on how and when LSL can be taken – employees and employers will be able to agree on the amount of leave that can be taken. The flexibility includes single days, half-pay, and double pay options.  

Cashing in on LSL   

An employer and employee may agree to cash out LSL once the employee has completed the necessary service and the leave has accrued. This agreement must be in writing, signed by both parties and the employee must be given an adequate benefit for the leave they have cashed out (e.g., the same amount as if they took the leave). 

Record Keeping and Penalties 

Additional record-keeping and payslip requirements are being introduced with penalties for non-compliance.  

Some of the records to be kept are as follows: Employers ABN, 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 LSL, including the amount of leave cashed out, the benefit paid to date, and the date this occurred. 

Penalties for breaching awards, legislation, and record-keeping will be substantially increased (e.g., from $500 to $13,000 and from $2,000 to $65,000), and orders may be made against the person who contravenes the award or legislation and other persons involved in the infringement. 

Penalties up to $650,000 may be ordered for serious contraventions by corporations. 

When businesses change hands 

Transfer of business provisions will be amended, including recognising numerous ways an old and new employer may have a connection that entitles the employee to have their service with the old employer recognised by their new employer.  

Employees re-hired by the new employer within three months of ending their employment with the old employer would have their service with the old employer recognised for LSL purposes even if they were not employed when the business transfer occurred. 

New provisions cater for business transfers if the employment of an employee of the old employer has ended (e.g., by resignation or termination by the employer). Within three months of employment ending, the employee becomes employed by the new employer; the work the employee performs is the same or substantially the same as the work the employee performed for the old employer, and there is a connection between the old employer and the new employer. 

The transfer of business provisions only applies for transfers after the commencement of the amendments to the LSL Act in early 2022. 

Entitlements are not changing 

As mentioned earlier, there are no amendments to the LSL entitlement rate and period.  

All paid leave is a liability for any business and most businesses are not aware of the actual cost associated with paying out leave until it’s too late.

Definitiv automatically captures and reports on a more accurate representation of your company’s leave and accrual provisions within the product to help you manage the leave liability. Read more about Definitiv’s reporting features here. Or book a demo to see it in action. 

Additional information on the amendments to the Long Service Leave Act 1958 and how they may impact your business and employees can be found on www.commerce.wa.gov.au. 

Information provided in this article is general information, not legal advice and should not be relied upon as such. Definitiv does not accept liability for any loss or damage arising from reliance on the content of this article.