Can An Employer Refuse Long Service Leave In Australia?

Long service leave (LSL) is a valuable entitlement for your team - and a planning challenge for many employers, especially in small businesses with lean staffing.

So, can an employer refuse long service leave? The short answer is: sometimes, but only on reasonable business grounds and always in line with the laws in your state or territory.

In this guide, we walk through when you can say “not right now,” when you must approve, what “reasonable” looks like in practice, and how to set up a fair, compliant process that works for your business in Australia - including notes for Victoria and Queensland.

How Long Service Leave Works In Australia

Unlike annual or personal leave, long service leave mostly comes from state and territory laws (not the Fair Work Act), so the rules vary by location. However, the big picture is consistent:

• Employees become entitled to LSL after a qualifying period (often 7-10 years), with pro-rata rights in some cases.
• Leave accrues based on continuous service, and continuity can survive things like parental leave or certain breaks, depending on the legislation.
• Taking the leave usually requires agreement on timing between you and your employee, and many jurisdictions set default minimum blocks and notice periods.

If you’re budgeting or sense-checking entitlements, it’s helpful to run the numbers with a Long Service Leave Calculator so you have a realistic view of when leave might be due and how much is owed.

Can An Employer Refuse Long Service Leave?

Generally, an employer can refuse a particular timing or pattern of LSL if there are reasonable business grounds to do so, and if the relevant state or territory law allows refusal in those circumstances.

Reasonable business grounds are practical and evidence-based. They’re not about avoiding the entitlement, but about managing when it’s taken. For example:

• A significant, known peak period where the employee’s role is critical (e.g. your busiest trading season).
• Genuine inability to backfill, despite reasonable attempts (e.g. specialised skills, regional staffing constraints).
• Operational changes that would make the business unworkable (e.g. mandated safety coverage that cannot be met).

Unreasonable grounds include a blanket refusal to allow LSL, refusing because the timing is inconvenient (without evidence of real impact), or pushing leave perpetually with no plan.

In practice, your process should be to consider the request promptly, consult on alternatives, and document your reasons - whether you approve, propose a different time, or refuse for now.

What’s Different In Victoria And Queensland?

Victoria

Under Victoria’s Long Service Leave Act 2018, employees become entitled after 7 years of continuous employment and can generally take LSL by agreement with you. The Act is designed to be flexible - for example, LSL can often be taken in smaller blocks and, in many cases, as little as one day at a time by agreement.

As a rule of thumb, your decision should be fair and based on genuine business needs. A complete refusal without considering alternatives, or without a sound operational reason, is risky.

Queensland

In Queensland, LSL is covered by the Industrial Relations Act 2016 (for most private sector employees covered by the state system). Entitlement typically arises after 10 years, and taking leave is usually by agreement, with minimum periods often set (commonly one week blocks unless you and the employee agree otherwise).

Queensland law also recognises that you may need structure around timing. If agreement can’t be reached, some provisions allow employers to direct LSL with notice, and reasonableness will still matter. If you’re considering a direction rather than agreement, get advice to ensure your approach and notice period align with the legislation and any industrial instrument.

How To Decide A Long Service Leave Request (Step-By-Step)

1) Ask For The Request In Writing

Have employees submit LSL requests in writing with proposed dates and lengths. This gives you a clear paper trail and the detail you need to assess operational impact.

2) Check Eligibility And Accrual

Confirm the employee’s service length and accrued entitlement under the applicable state or territory law. If you’ve had a business transfer or restructure, remember that service may carry over - our guide on transferring long service leave covers common scenarios.

3) Consider Business Timing

Assess whether the requested timing clashes with peak periods, shutdowns, or critical projects. Gather specific evidence (rosters, sales forecasts, safety coverage needs) to support any concerns.

4) Explore Alternatives

Work with the employee to find a compromise - a different start date, splitting leave into parts, or a backfill arrangement. Most LSL laws expect reasonable cooperation from both sides.

5) Decide And Document

Approve (with conditions if needed), propose alternative dates, or refuse for now based on reasonable business grounds. Document your reasons and confirm the outcome in writing.

6) Recordkeeping And Payroll

Update payroll and leave records, and ensure your payslips reflect LSL correctly. If the employee is resigning or being terminated, factor in any entitlement to a long service leave payout on resignation where applicable.

Reasonable Grounds To Refuse LSL: Practical Examples

These examples illustrate when refusal of proposed timing may be reasonable - always check the rules in your jurisdiction and consider your evidence:

• Peak Trade: You operate a seasonal retail business and the request covers the two-week period leading into Christmas, where the employee is the only trained store manager in that location.
• Safety-Critical Coverage: You run a workshop that must retain a licensed supervisor on each shift to meet regulatory requirements, and no qualified backfill is available for the requested period.
• Fixed Commitments: You have a signed project contract with immovable dates and the employee holds a unique certification essential to delivery, with no viable contractor available in time.

On the other hand, it may be unreasonable to refuse if you have viable backfill options (internal or casual), or if a short delay or a split leave arrangement would solve the problem without major disruption.

Managing LSL Requests Without Disrupting Your Operations

Plan Ahead With A Policy

Create a simple Long Service Leave policy that sets expectations about how to apply, typical notice periods, minimum blocks, and how you assess business impact. Housing this within a broader Workplace Policy framework keeps things consistent.

Align Your Employment Contracts

While you can’t contract out of statutory entitlements, your Employment Contract can include practical requirements (like applying in writing or cooperating to find workable dates) that support fair administration.

Use A Leave Calendar

Track approved leave (including annual, parental and long service leave) to avoid bottlenecks. Visibility helps you say “yes” more often, because you can see where the gaps are.

Backfill And Cross-Training

Reduce refusal risk by building basic cross-coverage into your team: cross-train where you can, line up casuals or contractors, and standardise critical procedures so others can step in more easily.

Communicate Early And Often

Encourage early conversations. If you know an employee will hit eligibility next year, plan together now - it’s far easier to schedule LSL six months out than six weeks out.

Frequently Asked Questions For Employers

Do I Have To Approve LSL If It’s A Quiet Period?

If business impact is minimal and the employee is eligible, it’s generally safest to approve. Most regimes expect cooperation. If you still have concerns (e.g. a small team, scarce cover), propose reasonable alternatives and document why the original dates are difficult.

Can I Direct An Employee To Take Long Service Leave?

In some jurisdictions, yes - with proper notice and within the legislation’s rules or any applicable award/enterprise agreement. This is often used to prevent very large accruals or during shutdowns. If you’re considering a direction rather than agreement, get advice for your state or territory.

Can Employees Take LSL In Small Blocks?

It depends on the jurisdiction. For example, Victoria allows more flexibility (by agreement, it can be taken in smaller periods, even as little as a day). Other states often default to longer minimum blocks (commonly one week) unless both sides agree otherwise. Your policy can encourage reasonable patterns that balance business needs and employee preferences.

What If An Employee Resigns With LSL Owing?

Most laws provide for payout of accrued long service leave upon termination (subject to qualifying rules), so check the relevant legislation and your records. If they give notice and want to use leave during that period, look at your obligations holistically alongside your general rules on employee leave during notice periods.

What If My Business Changed Ownership?

Service can carry across in many sale or transfer scenarios, which affects LSL accrual and eligibility. It’s important to review what was agreed in the sale and how your jurisdiction treats continuity - our overview of transferring long service leave is a useful starting point.

State And Territory Snapshot: Key Themes To Note

While the precise rules differ, a few consistent themes can help you apply the right approach wherever you operate:

• Eligibility Thresholds: Expect 7-10 years for full entitlement depending on the jurisdiction, with some pro‑rata rights earlier in limited circumstances.
• Agreement First: Most regimes assume LSL is taken by agreement, with reasonableness on both sides. This is your best path wherever possible.
• Minimum Periods And Notice: Many laws set default minimum blocks and require adequate notice; some allow shorter blocks by agreement.
• Direction As A Backstop: In certain states, if agreement isn’t possible, employers can direct leave with notice - but ensure you meet all statutory conditions before taking this route.
• Recordkeeping: Maintain accurate service and accrual records. If you’re unsure of the current accrual, use a calculator to estimate while you confirm the exact figure.

Common Compliance Pitfalls (And How To Avoid Them)

• Blanket Refusals: A standing rule that “we don’t allow LSL in November” is risky. Frame it as a strong preference with clear operational reasons, and consider exceptions where feasible.
• No Paper Trail: Verbal requests and ad hoc decisions lead to disputes. Require written requests, record decisions, and keep correspondence with your usual leave records.
• Ignoring Carryover Service: After a restructure or business purchase, overlooking prior service can understate entitlements. Factor in continuity rules early.
• Misunderstanding Minimum Blocks: If your state requires one-week blocks unless agreed otherwise, make sure your approval reflects what the law allows.
• Confusing LSL With Other Leave Types: LSL is separate from annual, personal/carer’s or parental leave, and the rules differ. If you need to manage broader working time settings, it can help to revisit your approach to maximum weekly hours and rostering alongside LSL planning.

Set Up Your Documents And Processes

Even a simple framework can make LSL straightforward to manage:

• Employment Contract: Confirm leave request processes, cooperation obligations and any practical requirements consistent with the law, within a robust Employment Contract.
• Workplace Policy: Outline how to request LSL, notice expectations, typical minimum blocks and how you consider business impact - as part of a broader Workplace Policy suite.
• Leave Calendar & Approvals: Use a central calendar and written approvals so scheduling stays fair and visible to your team.
• Payroll Settings: Ensure your payroll system correctly tracks accruals, loading (if any), and the LSL pay rate under the legislation.
• Exit Processes: If someone leaves, include LSL payout checks in your offboarding steps, alongside any other final pay requirements.

When To Get Legal Help

Long service leave isn’t just a box to tick - it touches staffing, payroll, contracts and compliance. It’s worth getting tailored advice when:

• You’re refusing or directing LSL and want to be sure your reasons and notice meet the law for your state or territory.
• Your business changed ownership or you’re taking over staff and you need clarity on continuity and liabilities.
• You’re updating your contracts and policies and want them to support compliant, practical LSL processes.
• An employee disputes eligibility, accrual or timing and you’d like a risk assessment and strategy.

Getting it right now helps you avoid expensive disputes later - especially where timing, payouts or termination intersect with leave entitlements.

Key Takeaways

• In Australia, long service leave is governed by state and territory laws. Timing is generally by agreement, and refusal must be based on reasonable business grounds.
• Victoria allows flexible patterns by agreement (including small blocks), while Queensland commonly expects longer minimum blocks unless you both agree otherwise.
• Set a simple, transparent process: written requests, eligibility checks, evidence-based impact assessment, and documented outcomes.
• Plan ahead with cross-coverage, a leave calendar, and clear documents like an Employment Contract and Workplace Policy to minimise disruption.
• If you’re dealing with business transfers, resignations or terminations, factor in continuity rules and potential long service leave payouts.
• When in doubt - especially if you’re considering a refusal or direction - get tailored legal advice for your state or territory.

If you’d like a consultation about managing long service leave in your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.