Taking long service leave might seem like one of the perks of working for a big corporation or government department – but it can apply to small business employees too.
Here’s an overview of how long service leave works as a paid entitlement in Western Australia and how it works in a small business.
How long is ‘long’ service?
Entitlements for long service leave depend on the type of business – and whether the employee has finished working for that employer or is continuing to work for them. Under the WA Long Service Leave Act 1958, a full time, part time or casual employee may be entitled to long service leave payments:
- After 7 years of continuous employment when their employment ends because of resignation, dismissal, redundancy or if the employee dies.
- After 10 years of continuous employment, when they would be entitled to 8.667 weeks of long service leave. After that initial 10 years, they would accrue a further 4.333 weeks of long service leave for every 5 years of continuous employment.
Long service leave entitlements can apply when a business changes hands. For example, if you bought a business and continued to employ someone who had been working for the previous owners, their years of service before you took over will count towards their long service leave in years to come.
How much needs to be paid?
If you have an employee who is entitled to long service leave, they would be paid at their ordinary pay rate when taking long service leave or cashing out at the end of their employment. You might like to use the WA Long Service Leave Calculator to help you run some figures.
If you have an employee who is entitled to long service leave, they could take it in one continuous period or negotiate with you to take it in separate periods. You might also be flexible on making other arrangements such taking twice the amount of time off to be paid at half-pay, or taking half the amount of time off to be paid at double pay for a certain period.
Who is entitled to long service leave?
There are some exceptions, but generally long service leave is an entitlement for most private sector employees. Find out more about who is covered by the Long Service Leave Act in WA.
Does the Act apply to all businesses in WA?
Most private sector employers and employees in both the state and national industrial relations systems are covered by the state Long Service Leave Act.
If your business is in the construction industry, it’s important to know about the different long service leave arrangements that apply to your business – so we’ve included more details on this below.
Long service leave in the construction industry
If you employ construction workers, including apprentices and employees under a working visa, you need to know about MyLeave, a government authority with a mandatory scheme to provide long service leave entitlements for WA construction workers.
You’ll need to register with MyLeave and pay a levy to MyLeave every three months. This levy contributes to the cost of long service leave payments for construction industry employees.
Just like tax, super and other obligations as an employer, if you don’t register and pay contributions, you could receive fines and penalties. Visit MyLeave to find out more.
Long service leave: Tips for small business owners
Know your obligations
Whether you started your business or bought an existing business, you should understand your obligations to your employees, including their long service leave entitlements.
Understand your liabilities
Financial management – including keeping accurate and up-to-date records – is a vital part of running a successful business. Whether it’s through a balance sheet entry or a leave liability report, make sure you have a reporting process in place to update your liability for all leave entitlements.
To manage the financial impact of your employees taking their long service leave, you need to make sure you budget for these entitlements over time. You may also need to have plans in place to cover the work they do during their leave. This could involve hiring a casual staff member or training one of your existing employees to take on different duties for a period of time.
Find out more
For more information about long service leave entitlements in WA, take a look at these long service leave explainer videos from the WA Government.
If you need a break but don’t have employees, look at our tips about how to take a holiday from your business.
To get regular updates and small business information like this delivered to your inbox, sign up for our regular e-news.