We have an employee who was full time and they have changed to permanent part time, working 4 days a week compared to previously on a 5 day salary position. This employee has been with us for 18 years and are wondering how do we treat the accrual of long service leave, annual leave and personal leave?
It is important to remember that not all types of leave accrue in the same manner.
Personal/carers leave and annual leave accrue progressively during the year.Each type of leave is payable at the rate of pay that is current at the time that the leave is taken, irrespective of any previous variations in hours of work.
Long service leave is an entitlement derived primarily from state legislation. The entitlement differs to varying degrees based on which state the employee concerned is based in.
Generally speaking, long service leave is an entitlement that crystallises after a required period of continuous service is reached.Unlike the abovementioned types of leave, the payment associated with long service leave can vary where the employee’s hours have changed over the course of the employee’s continuous service.
Where an employee’s hours have varied during the course of the employment relationship, further investigation will be required to determine if the variation has an effect on the rate of payment of the employee’s long service leave.See below for a brief summary of how varying hours are used in the calculation of long service leave rates of pay, federally and across the states and territories.
Varying hours are not addressed.
Where an employee is covered by the long service leave provisions in a pre-modern federal award, the employee should be paid their long service leave entitlement based on their contracted hours.
Where the employee has no fixed weekly number of hours: use the average weekly hours over 12 months or 5 years, whichever is greater.
Where the employee has fixed hours, but those hours have varied: use either the current remuneration of the employee or the average remuneration over the preceding 5 years, whichever is greater.
Use the greater of the following of 1), 2) or 3) below.
In relation to the 52 weeks immediately before the employee starts long service leave, the average weekly number of hours, calculated as follows:
where:
In relation to the 260 weeks immediately before the employee starts long service leave, the average weekly number of hours calculated as follows:
where:
In relation to the employee's last period of continuous employment immediately before starting long service leave, the average weekly number of hours calculated as follows:
where:
For part-time and casual employees, a formula calculates the average number of hours worked in a period of service:
(Actual service ÷ 52) × (8.667 ÷ 10 × hourly rate)
This formula is used if the employee concerned was a casual or regular part-time employee at any time during the employee’s continuous service to which long service leave relates.
If the employee's hours varied over the previous three years, use the employee's average hours over that period.
Where no fixed normal weekly number of hours, average weekly number of hours worked over the past 12 months.
Where the hours of work of the employee vary, the hours are averaged over the period of employment.
Use the average hours worked over the past 12 months.
Use the average hours per week worked during each year of service over which the entitlement accrued.
