By
NSW Industrial Relations
Promoting industrial legislation compliance
The Long Service Leave Act 1955 (LSL Act) provides full-time, part-time and casual workers in NSW to 2 months (8.6667 weeks) paid long service leave when they have completed a continuous period of 10 years' service with the same employer. The NSW Industrial Relations has outlined different circumstances and situations to help you understand how to calculate a casual worker's entitlement.
Casual workers often work irregular hours, meaning they will have weeks when they work zero hours. Zero-hour weeks fall into five categories, and those categories are treated differently with respect to the accrual of service and how it will impact the calculation of average weekly hours/ordinary remuneration for payment:
1. A worker has chosen not to be available for that week: This counts as service and is included in the calculation of average weekly hours.
2. A worker is ready, willing and able to work but not rostered by the employer: Counts as service and is included in the calculations of average weekly hours.
3. Absences that are clearly unpaid leave under the terms of employment, for example, a Christmas closedown period: Count as service, but these weeks are excluded in the calculations of average weekly hours.
4. Absences (whole weeks) due to illness or injury of the worker: Counts as service, but these weeks are excluded in the calculations of average weekly hours.
5. Absences due to parental leave: This does not count as service (but does not break service) and the weeks are excluded in the calculations of average week hours.
A zero-hour week does not break continuous service. For service to be broken, a careful assessment must be performed by looking at the criteria under s.4(11) (a1) of the LSL Act:
- How long has the worker not worked? Is it more than two months? If so, is it an absence under the terms of their casual employment? Are there any relevant provisions in their Award or enterprise agreement? Is it due to the slackness of the employer's trade?
- Is there evidence that they are still active "on the books," e.g. they have notified the employer of their availability and desire to work, or the employer has contacted them to try and roster them?
- Is the absence due to illness, injury or parental leave?
It's important to look at all the factors to ascertain whether a period of zero hours weeks constitutes a break in service.
Once you have identified that they have reached eligibility for long service leave, then you need to calculate how much is payable for each weeks' entitlement.
Calculating the average weekly hours of work before calculating ordinary remuneration
- When calculating average weekly hours, only ordinary hours are included.
- For the calculation of average weekly number of hours, the weeks in which a casual worker was accruing service, but not earning income, should be considered weeks in which the worker was "working". These working weeks should therefore be included in the calculation of the "average weekly number of hours". These weeks may occur because the worker notified the employer that the worker will not be available or because the worker was ready, willing and able but was not rostered.
- The periods of unpaid leave such as absences due to the worker's illness or injury are excluded from the calculation of the average weekly hours under s 3(2A) of the LSL Act even though these periods count as service. Absences of less than a week should not be considered unpaid leave. For these periods to be excluded, from the periods of either 12 months or 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the unpaid absences due to the worker's illness or injury. So if someone was off work for 4 weeks due to illness, you would take those weeks out of the averaging exercise and reduce the divisor from 52 weeks to 48 or 260 weeks to 256.
- Periods of unpaid parental leave are also excluded when averaging the weekly number of hours worked. For these periods to be excluded, from the periods of either 12 months or 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the unpaid parental leave. If a person was on parental leave for 26 weeks during the last 12 months, you would take those weeks out of the averaging exercise and reduce the divisor from 52 weeks to 26 or from 260 weeks to 234.
- Absences which are clearly unpaid leave, for example, a Christmas closedown, are also excluded when averaging the weekly number of hours worked. For these periods to be excluded, from the periods of either 12 months or 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the closedown. If the office was closed down for two weeks each year over Christmas, you would take those weeks out of the averaging exercise and reduce the divisor from 52 weeks to 50 or from 260 weeks to 250 weeks.
- Determine whether the average weekly number of hours over the previous 12 months or the previous 5 years is higher. The higher average of the two will be the deemed normal weekly number of hours.
Calculating the ordinary remuneration
- The next step is to then use the deemed hours (i.e., the higher of the two average hours calculations) to determine the ordinary remuneration on the prescribed date by multiplying the deemed hours by the hourly rate of pay on the prescribed date.
- The deemed hours are also used for each week the worker worked over the last 5 years (where they did not have fixed normal weekly number of hours) and multiply by the hourly rate of pay of the worker applicable for that week to determine the ordinary remuneration for each week over the last 5 years.
- The weeks in which a casual worker was accruing service, but not earning income, should be considered weeks in which the worker was "working". These working weeks should therefore be included in the calculation of the "average weekly amount of the ordinary remuneration". These weeks may occur because the worker notified the employer that the worker will not be available or because the worker was ready, willing and able but was not rostered.
- The periods of unpaid leave such as absences due to the worker's illness or injury are excluded from the calculation of the "average weekly amount of the ordinary remuneration" even though these periods count as service. Absences less than a week should not be considered unpaid leave. For these periods to be excluded from the 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the unpaid absences due to the worker's illness or injury.
- Periods of unpaid parental leave are also excluded from the calculation of the "average weekly amount of the ordinary remuneration". For these periods to be excluded from the 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the unpaid parental leave.
- Absences which are clearly unpaid leave, for example a Christmas closedown are also excluded from the calculation of the "average weekly amount of the ordinary remuneration". For these periods to be excluded from the 5 years ending on the day prior to the leave being taken or paid, the divisors would need to be reduced by the relevant length of the closedown.
NSW Industrial Relations
Promoting industrial legislation compliance
The NSW Industrial Relations Inspectorate promotes compliance with industrial legislation by providing information, advice, and assistance related to industrial entitlements, conducting industrial inspections and targeted campaigns, and prosecuting breaches of industrial law when necessary.
