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Long service leave: penalties for breaches

Avoid penalties by understanding the rules

On this page

  • Learn about penalty units  
  • Know when a penalty unit may be applied
  • Understand who is liable for a penalty
  • Find out what happens if payments aren't made

Long Service Leave changes coming 1 November 2018

The Long Service Leave Act 2018 will come into effect on 1 November 2018 and supersede the 1992 Act. 

These changes include:

  • greater flexibility for women, families and people transitioning to retirement
  • access to long service leave after seven years, not ten
  • allowing employees to take long service leave in smaller increments (i.e. for any period of one day or more)
  • most absences from work do not break continuous employment
  • unpaid leave, including parental leave, counts towards long service leave
  • increased penalties for employers who do not keep records or do not produce them when requested. 

This website, including the Long Service Leave calculator, will be updated to reflect those changes on 1 November.

Read the Long Service Leave Act 2018 FAQs

If you own, are looking to purchase, or start a small business with under 20 employees, you may be eligible for our Long Service Leave Small Business Information Service (LSLSBIS).

LSLSBIS offers one-on-one information and advice regarding your responsibilities under the Victoria Long Service Leave Act.

To access this program, contact Wage Inspectorate Victoria by giving them a call on 1800 287 287 or send them an email.

What is a penalty unit?

A penalty unit is used instead of a dollar amount in most modern legislation. Not abiding by the Long Service Leave (LSL) Act may subject employers to penalties.

Offences under the LSL Act attract a penalty of 20 penalty units. 

The sole exception to this is the penalty for an offence relating to an employee working while on long service leave. This offence attracts a penalty of five penalty units for breach by an employee and/or an employer. Where an employer or employee is found guilty of an offence, a criminal conviction may also be recorded

See the current value of a penalty unit

When do penalty units apply?

Penalties may apply where an employer:

  • fails to pay an employee while the employee is on long service leave
  • fails to pass on a pay increase that occurred while the employee was on long service leave
  • fails to pay an accrued entitlement on termination of employment
  • fails to pay an accrued entitlement on the employee's death
  • pays an employee in lieu of allowing the employee to take long service leave as a paid break from work – known as 'cashing out'
  • knowingly employs a person while that employee is on long service leave from employment with that employer or another employer
  • fails to maintain correct records
  • makes a false or misleading statement in a record,

or where an employee:

  • accepts payment in lieu of taking long service leave as a paid break from work – known as 'cashing out'
  • works elsewhere while on long service leave from another employer.

Who else is liable?

  • Under the LSL Act, a director of a corporation, or a person who takes part in the management of a corporation, may also be liable for the conduct of the corporation where the director knew about the conduct, or was reckless as to whether the conduct engaged in was in breach of the LSL Act.
  • If found guilty, the director or manager would then be liable for penalties and/or criminal conviction, in the same way as the corporation.
  • Conduct of a director, employee or agent acting with apparent authority, or of a person authorised by a director, employee or agent, is also conduct engaged by the corporation itself.

What if an employer doesn't pay long service leave?

  • An employee is able to seek recovery of money owed under the LSL Act as an application for arrears in pay. 
  • The application is heard in the Magistrates' Court and – if an order is made in the employee's favour – it may include an order that the payment be made with interest. 
  • The proceeding must commence within six years of the employee's entitlement arising.
  • Employees may ask an organisation registered under the federal FairWork (Registered Organisations) Act 2009 to take an action to recover money on their behalf. They may make such a request if they're a member of the organisation, or eligible to be a member.
  • If an employer fails to pay an employee his or her long service leave entitlement, the employer may also be prosecuted in the Magistrates' Court. 
  • Industrial Relations Victoria is able to investigate claims of unpaid or underpaid long service leave entitlements and – with the authorisation of the Minister for Industrial Relations – pursue a prosecution in the Magistrates' Court for an offence under the LSL Act.
  • If an employer is found guilty of failing to pay a long service leave entitlement, the employer may be fined the appropriate penalty and may also have a criminal conviction recorded against them – there is also the possibility of an order being made that the employer be responsible for the legal costs of the prosecuting agency.
  • If the employer is found guilty, the Court may also order that the employer pay their employee the money due to the employee, possibly with interest – the penalty for this offense is 20 penalty units for the employer.

Prohibition on dismissals – or other prejudicial action – to avoid LSL Act obligations

  • The LSL Act prohibits an employer from sacking or demoting an employee in order to avoid their obligations under the Act. 
  • As it is difficult for an employee to prove that the employer's reason for the dismissal was to avoid their long service leave obligations, the Act provides a reverse onus of proof. So, where the employee can provide evidence that they were dismissed after they applied for leave or the dismissal took place whilst they were on leave, the employer must prove that the sacking was for some other lawful reason.
  • It will not be a criminal offence to terminate employment to avoid LSL Act obligations – instead a civil penalty of up to $10,000 will apply.
  • The Court will be able to award the penalty to the individual, to the Consolidated Fund, or to an organisation – usually only so ordered where the organisation has incurred the costs of the proceeding.
  • The Court can also order reinstatement and reimbursement of lost wages. Where reinstatement is not appropriate the Court may order compensation.

You can find more information about penalties for breaching the LSL Act by viewing the:

Need further assistance?

Looking for further assistance and advice about long service leave? Give Wage Inspectorate Victoria a call on 1800 287 287.

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