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Examples of how long service leave is calculated

Easily relate the legislation with your situation.

On this page

  • Read common examples
  • Calculate long service leave correctly
If you need further assistance at any time, please contact Employment Information and Compliance on 1800 287 287

Ordinary Pay

Example

My Linh has worked continuously for 11 years and decides to resign from employment.  My Linh’s long service leave entitlement is calculated by following the steps below.

  1. 11 years multiplied by 52 weeks = 572 weeks.
  2. Divide the total weeks by 60, as My Linh will receive one week of long service leave for each 60 weeks of service.  572 weeks divided by 60 = 9.53 weeks.
  3. At the time of resignation, My Linh’s ordinary pay is $500.00 per week gross.  9.53 weeks multiplied by $500.00 per week is $4,765.00 gross.

My Linh is therefore entitled to a payment of $4,765.00 (gross and subject to statutory taxation) on the day her employment ends.

Legislation

Ordinary pay is the actual pay received by an employee for working his or her normal weekly hours at the time the employee takes long service leave or ceases employment and has their long service leave paid out.

It does not include most allowances, penalty or overtime rates but is the actual ordinary time rate received even if the employee is a casual employee (note that a casual employee’s ordinary rate includes the casual loading). Ordinary pay includes the cash value of any board or lodging that the employee receives from his or her employer.

Varied hours (e.g. casual employment)

Example

Melinda has worked at a shoe shop as a casual for the past 22 years.  She works according to a roster but depending on how busy the shop is, she works a different amount of hours week to week. Melinda has not taken any long service leave before, but would like to do so now.
Melinda’s hours over the past five years are shown in the table below.

Year
Hours worked
Average number of hours worked per week (number of hours divided by 52
2001
220
4.23
2002
200
3.8
2003
240
4.6
2004
210
4.0
2005
230
4.4
Average over 5 years
220 (total hours worked over 5 years divided by 5
4.2 (total average hours divided by 5)

If Melinda’s hours are averaged over the last 12 months of employment,
her long service leave would be calculated at 4.4 hours per week.  However, if her hours are averaged over the previous five years, her entitlement would be to long service leave based on 4.2 hours per week.

Melinda’s long service leave should therefore be calculated based on the average weekly rate over the past 12 months, and she will be entitled to long service leave based on 4.4 ordinary hours per week.

Legislation

An employee’s long service leave entitlement is based on his or her normal weekly hours at the time the leave falls due or is to be paid out.
However, in some cases, an employee’s hours may vary from week to week. This may occur, in particular, for casual employees.

Where an employee’s hours vary from week to week, the employee’s hours for calculating long service leave will be averaged over the preceding 12 months, or the preceding five years, whichever average hours are the greater.

Ordinary hours changed during employment (e.g. full to part time)

Example

Danielle has been continuously employed for 16 years. However, she worked full time (38 hours) for the first 15 years of employment,
and then part time for 20 hours per week in the 16th year.
Danielle’s ordinary hours over the past five years are shown in the table below.

Year
Hours worked per week
2001
38
2002
38
2003
38
2004
38
2005
20
Average over 5 years
34.4 (calculated by adding up the hours worked each week for the past 5 years and dividing by 5)
If Danielle’s hours are averaged over the last 12 months of employment,
her long service leave would be calculated at 20 hours per week.  However, if her hours are averaged over the previous five years, her
entitlement would be to long service leave based on 34.4 hours per week.

Danielle’s long service leave should therefore be calculated based on the average weekly rate

Legislation

An employee’s long service leave entitlement is based on his or her normal weekly hours at the time the leave falls due or is to be paid out.
However, in some cases, an employee’s ordinary hours of employment may alter.  For example, an employee may move from full time to part time employment, or vice versa.

Where an employee’s ordinary hours have changed in the 12 months immediately before the employee takes long service leave, the employee’s
hours for calculating long service leave will be averaged over the preceding 12 months or five years, whichever average hours are the greater.

No ordinary pay

Example

Dragan is a real estate agent who has worked for the same agency for 11 years.  Dragan has resigned from his employment and he did not take any long service leave during the course of his employment.Dragan’s contract of employment specifies he is paid a retainer of $25,000 per annum, plus commission for sales he has written for the company.  In the last 5 years,

Dragan’s retainer did not alter but commission was variable.  Dragan’s ordinary pay over the past five years has varied as shown in the table below.

Year
$ Comission
$ Retainer
$ Total p.a.
Average weekly rate/year (total income divided by 52)
2001
12 000
25 000
37 000
$711.54
2002
10 000
25 000
35 000
$673.08
2003
15 000
25 000 40 000
$769.23
2004
8 000
25 000 33 000
$634.62
2005
6 000
25 000 31 000
$596.15
Total average yearly pay for last 5 years.



$676.92 (calculated by first adding together the average weekly rate for the past 5 years and then dividing by 5.

If Dragan’s ordinary weekly rate of pay is averaged over the last 12 months of employment, his long service leave would be calculated on the basis of his ordinary weekly pay being $596.15.

However, if his ordinary weekly rate of pay is averaged over the previous five years, his entitlement would be to long service leave based on an ordinary weekly rate of pay of $676.92.

Dragan’s long service leave should therefore be calculated based on the average weekly rate over the past 5 years, and he will be entitled to long service leave based on an ordinary weekly rate of $676.92. 

Legislation

An employee’s long service leave entitlement is based on his or her ordinary time rate of pay at the time the leave is taken or is to be paid out.  However, in some cases (where this is permitted by the relevant award or agreement) an employee may not have a fixed ordinary time rate of pay.  For example, the employee may be paid per piece of work, per delivery, or on commission and retainer or base rate.

Non-discretionary commissions and regular bonuses (for example, those based on sales targets) may be counted as part of ordinary pay if they are included in the employee’s oral or written contract of employment.

Where an employee’s rate of pay varies from week to week, the employee’s rate of pay for calculating long service leave will be averaged over the preceding 12 months or five years, whichever average rate is the greater.

The phasing in arrangement

Example

Sarah has been employed in a flower shop since 1 July 1996.
A friend told her about an entitlement to long service leave at ten years. On 1 July 2008 she asked her employer about the entitlement.
Sarah's employer explained that her entitlement to take long service leave will be calculated on the basis that:

  • Sarah worked a total of 9.5 years in the period before 1 January 2006
  • two thirds of this period is taken into account. 9 years and 4 months – 1/3 = 6.33 years
  • Sarah worked a total of 2.5 years from 1 January 2006 to 1 July 2008. All of this period is taken into account.

Sarah's relevant period of service is therefore 6.33 + 2.5 = 8.83 years.

Because this is less than 10 years, she is not eligible to take long service leave.

On 1 September 2009, when Sarah has worked another 1.17 years, she will have  completed 10 years eligible service and will be entitled to take long service leave.

Legislation

Since 1 January 2006 the entitlement to take long service leave after 10 years service has been progressively phased in.

So, to calculate when an employee is eligible to take leave under the phasing arrangement you take:

  • two thirds of an employee’s period of service before 1 January 2006 and
  • all of an employee’s period of service from 1 January 2006 is taken into account.
When this amounts to a total of 10 years, the long service leave entitlement is due to be taken.

This phasing-in method does not reduce the amount of long service leave to which an employee is entitled once the 10 year service is calculated.

Phasing does not apply for termination of employment.