Victoria’s long service leave framework underwent significant reform with the introduction of the Long Service Leave Act 2018, which replaced the previous 1992 legislation. The new Act modernised entitlements, clarified ambiguities, and introduced changes that every Victorian employer needs to understand.
Whether you’re a small business or a large organisation, long service leave (LSL) represents a substantial financial obligation. Getting it wrong can result in underpayments, compliance breaches, and disputes with employees or the Wage Inspectorate Victoria.
This guide covers everything you need to know about LSL in Victoria — from qualifying periods and entitlement calculations to the 2018 changes, portability schemes, and termination scenarios.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Employment law is complex and subject to change. Consult a qualified employment lawyer or the Wage Inspectorate Victoria for guidance specific to your organisation.
What Changed Under the Long Service Leave Act 2018?
The 2018 Act introduced several important changes that employers should be aware of:
- Parental leave now counts as service — Up to 12 months of parental leave is counted as continuous service for LSL purposes (previously, it only preserved continuity without counting towards the qualifying period)
- Clearer rules for casual employees — The Act clarified how casual employees qualify for LSL
- Updated rules for taking leave — Employees and employers can now agree to take LSL in shorter blocks (minimum one day), rather than the previous requirement for longer periods
- Illness during LSL — If an employee falls ill during long service leave, they can apply to have that period re-credited as LSL and instead use their personal/carer’s leave
- Modernised definitions — The Act updated definitions of “ordinary pay” and “continuous employment” to reflect contemporary workplace arrangements
These changes took effect on 1 November 2018 and apply to all Victorian employees covered by the Act.
Who Is Covered?
The Long Service Leave Act 2018 applies to employees in Victoria who are not covered by a federal award or enterprise agreement that contains LSL provisions. In practice, this means:
- Employees of sole traders, partnerships, and unincorporated entities are typically covered by the Victorian Act
- Employees of incorporated companies (Pty Ltd) are generally covered by the relevant federal award or the National Employment Standards
However, many federal awards and enterprise agreements either mirror or refer to the relevant state legislation for LSL. Always check your applicable award or agreement first.
Qualifying Period
In Victoria, employees become entitled to long service leave after 15 years of continuous service with the same employer (or a group of related employers).
This is longer than some other states — NSW and Queensland, for example, require only 10 years. The 15-year qualifying period has been a feature of Victorian LSL law for decades and was retained in the 2018 Act.
Continuous Service in Victoria
Continuous service includes:
- All periods of paid leave (annual leave, personal leave, paid parental leave)
- Up to 12 months of parental leave (paid or unpaid) — this is a key change from the 2018 Act
- Periods of absence due to illness or injury, including workers’ compensation
- Authorised unpaid leave (up to the limits specified in the Act)
- Periods of stand-down
Continuous service is not broken by:
- Authorised absences (even if unpaid, provided they are within the permitted limits)
- Transmission of business (if the business is sold and the employee continues working for the new owner)
Continuous service is broken by:
- Unauthorised absences
- Resignation followed by re-employment (unless the break is very short and the employer agrees to recognise prior service)
Entitlement Amount
The standard LSL entitlement in Victoria is 13 weeks (one quarter of a year) of leave after 15 years of continuous service.
After the initial 15 years, employees accrue additional LSL at the rate of 8.6667 weeks for every additional 10 years of service, which equates to approximately 0.8667 weeks per year of additional service.
| Years of Service | LSL Entitlement |
|---|---|
| 15 years | 13 weeks |
| 20 years | 17.3333 weeks |
| 25 years | 21.6667 weeks |
How Does This Compare to Other States?
Victoria’s entitlement is relatively generous in terms of the total weeks granted, but the longer qualifying period means employees wait longer to access it. By comparison:
- NSW: 8.6667 weeks after 10 years
- Queensland: 8.6667 weeks after 10 years
- South Australia: 13 weeks after 10 years
Pro Rata Access
Victorian employees can access pro rata long service leave in certain circumstances before reaching the full 15-year qualifying period.
Pro Rata on Termination After 7 Years
If an employee’s employment ends after 7 or more years of continuous service, they are entitled to a pro rata payment of their LSL entitlement. This applies regardless of whether the termination is due to resignation, redundancy, dismissal, or retirement.
The calculation is:
Pro rata LSL = (Years of service ÷ 15) × 13 weeks
Example: An employee who is made redundant after 10 years of service:
- (10 ÷ 15) × 13 = 8.6667 weeks of LSL pay
Pro Rata During Employment After 7 Years
Under the 2018 Act, employees can also request to take pro rata LSL after 7 years of service, with the employer’s agreement. This is not an automatic right — the employer must consent — but it provides flexibility for both parties.
When Pro Rata Does Not Apply
Pro rata entitlements are not available if:
- The employee has less than 7 years of continuous service
- The employee is dismissed for serious misconduct and has less than 15 years of service
If the employee has reached 15 years or more, they are entitled to the full accrued LSL regardless of the reason for termination.
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Payment Calculations
LSL in Victoria is paid at the employee’s ordinary rate of pay at the time the leave is taken or paid out.
Defining Ordinary Pay Under the 2018 Act
The 2018 Act defines ordinary pay to include:
- Base salary or wages
- Incentive-based payments and bonuses that are regular and ongoing
- Allowances that are part of the employee’s regular remuneration
- The monetary value of non-cash benefits (e.g., accommodation, meals) that form part of the remuneration package
It does not include:
- Overtime payments
- Reimbursements for expenses
- Irregular or one-off bonuses
This definition is broader than some employers realise. If an employee regularly receives a performance bonus or commission that forms part of their expected remuneration, it may need to be included in the LSL pay calculation.
Calculation Example
Full-time employee earning $95,000 per year (base salary plus regular allowances):
- Weekly rate: $95,000 ÷ 52 = $1,826.92
- LSL entitlement after 15 years: 13 weeks
- Total LSL value: $1,826.92 × 13 = $23,750
Part-time employee working 22 hours per week at $40/hour:
- Weekly earnings: 22 × $40 = $880
- LSL entitlement after 15 years: 13 weeks
- Total LSL value: $880 × 13 = $11,440
Taking Long Service Leave
Under the 2018 Act, employees and employers have more flexibility in how LSL is taken:
- Leave can be taken in blocks as short as one day, provided the employer and employee agree
- If there is no agreement on the period, the employee can take the leave in one continuous block
- Employees must give at least 30 days’ notice (or such shorter period as agreed) before taking LSL
- Employers cannot unreasonably refuse a request to take LSL
Illness During LSL
If an employee becomes ill or injured while on long service leave, they can apply to have the period of illness re-credited as LSL and instead use their personal/carer’s leave entitlement. This was a significant change introduced by the 2018 Act and aligns LSL with the approach already taken for annual leave in many workplaces.
Portability in Victoria
Victoria has industry-specific portable long service leave schemes for certain sectors. These schemes allow workers to accumulate LSL credits across multiple employers within the same industry.
Industries Covered
The following industries have portable LSL schemes in Victoria:
- Building and construction — administered by CoINVEST
- Community services — administered by the Portable Long Service Benefits Authority
- Contract cleaning — administered by the Portable Long Service Benefits Authority
- Security — administered by the Portable Long Service Benefits Authority
How Portability Works
In these industries:
- Employers register with the relevant authority and make regular contributions (typically a percentage of wages)
- Workers accumulate service credits regardless of which employer they work for
- When a worker reaches the qualifying period (which may differ from the general LSL Act), they can claim their entitlement from the authority
- The worker’s service is portable across employers within the industry
If your business operates in one of these sectors, you have separate registration and reporting obligations. Failure to register or make contributions can result in penalties.
General Portability
Outside of the specific industry schemes, Victoria does not have general portability of long service leave. If an employee moves from one employer to another in a non-covered industry, their LSL clock resets to zero.
Transmission of Business
If a business is sold, transferred, or restructured and employees continue working for the new owner, their prior service counts towards LSL entitlements. The new employer effectively “inherits” the LSL liability.
This is an important consideration in mergers and acquisitions. The purchase price or terms of sale should account for the accrued LSL liability of transferring employees.
Breaks in Service
A break in service does not always mean the employee loses their accrued LSL credits. The key questions are:
- Was the absence authorised? If so, continuity is preserved (though the period may not count as service for accrual purposes)
- Was the break a resignation and re-employment? If so, prior service generally does not count unless the employer agrees to recognise it
- Was there a transmission of business? If so, service carries over automatically
Employers should document all breaks in service carefully and maintain clear records of whether prior service is being recognised.
Interaction with Termination
Resignation After 15+ Years
The employee receives the full accrued LSL balance, paid at their current ordinary rate.
Resignation After 7–15 Years
The employee receives a pro rata payment based on years of service.
Resignation Before 7 Years
No LSL entitlement. The employee forfeits any accrued LSL.
Redundancy
All LSL entitlements (full or pro rata from 7 years) must be paid out.
Dismissal for Serious Misconduct
If the employee has 15+ years of service, they still receive their full LSL entitlement. If they have 7–15 years, the pro rata entitlement is forfeited if the dismissal is for serious misconduct.
Death of an Employee
Any accrued LSL is paid to the employee’s estate or personal representative.
Record-Keeping and Compliance
Employers in Victoria must maintain accurate records of:
- Each employee’s start date and service history
- Any periods that affect continuity or accrual (parental leave, unpaid leave, etc.)
- LSL taken and the dates and duration of each period
- Payments made for LSL
The Wage Inspectorate Victoria has the power to investigate complaints, conduct audits, and issue compliance notices. Penalties for non-compliance can include fines and orders to pay outstanding entitlements.
Common Compliance Mistakes
1. Not Counting Parental Leave as Service
Under the 2018 Act, up to 12 months of parental leave counts as service. Many employers still operate under the old rules and fail to include this period.
2. Ignoring the 7-Year Pro Rata Threshold
Employees who leave after 7 years are entitled to a payout. This is a common oversight in final pay calculations.
3. Underestimating Ordinary Pay
Regular bonuses, commissions, and allowances may need to be included in the LSL pay rate. Using only the base salary can result in underpayment.
4. Poor Record-Keeping
Without accurate records spanning decades of employment, it’s difficult to calculate LSL correctly. Invest in proper systems early.
Key Takeaways for Victorian Employers
- Employees are entitled to 13 weeks of LSL after 15 years of continuous service
- Pro rata access applies from 7 years on termination (or by agreement during employment)
- The 2018 Act introduced important changes, including counting parental leave as service and allowing leave in shorter blocks
- Portability applies in construction, community services, contract cleaning, and security industries
- LSL is paid at the ordinary rate of pay, which may include regular bonuses and allowances
- Accurate, long-term record-keeping is essential for compliance
Long service leave is a significant and growing liability. With qualifying periods of 7 to 15 years, the financial impact compounds over time. Using dedicated leave management software to track entitlements, flag milestones, and calculate payouts accurately is the best way to protect your business from compliance risk.
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