Does Long Service Leave Accrue During Maternity Leave in Australia?

Parental leave is a big milestone for your team and your business. It’s also a time when questions about leave entitlements, payroll and record-keeping naturally come up - especially around long service leave (LSL) and whether it continues to build while someone is on maternity or parental leave.

In Australia, the answer depends on a mix of factors: whether the leave is paid or unpaid, which state or territory LSL law applies, and what your employment contracts or enterprise agreement say. The good news? With a bit of planning, you can set clear expectations and stay compliant.

In this guide, we’ll break down the general rules, highlight key state differences, and share practical steps so you can handle LSL during maternity leave confidently and fairly.

What Is Long Service Leave And Who Does It Apply To?

Long service leave is an entitlement that rewards long, continuous service with the same employer. Unlike annual leave (which accrues nationally under the Fair Work Act), LSL is largely governed by state and territory legislation. That’s why the rules about accrual during parental leave can differ depending on where your employee usually works.

Most schemes grant an entitlement after a qualifying period (for example, around 7-10 years depending on the jurisdiction), with pro rata entitlements sometimes available on earlier termination in limited circumstances. The exact accrual rate and thresholds vary by state.

If you’re in Victoria or Western Australia, for instance, there are specific pieces of legislation and guidance that set out how to calculate and manage entitlements. For deeper dives and examples, you can refer to resources such as calculating long service leave in Victoria and the guide to long service leave in WA.

Does Long Service Leave Accrue During Maternity (Parental) Leave?

The core question is whether time on parental leave counts as “service” for LSL purposes - and if counted, whether accrual continues or only continuity is preserved. The broad, Australia-wide principles look like this:

• Paid parental leave from the employer often counts as service for LSL and commonly accrues LSL like other paid leave. This typically includes company-paid maternity leave or paid special parental leave provided by the employer.
• Government Paid Parental Leave is paid by Services Australia rather than the employer. If the employee is on unpaid leave from the employer’s perspective while receiving government payments, that period is usually treated as unpaid parental leave under LSL laws.
• Unpaid parental leave generally does not accrue LSL in many jurisdictions. However, most states and territories preserve continuity of service for a defined period (so the clock isn’t “reset”), and some jurisdictions count a portion of unpaid parental leave as service for accrual purposes.

Employment instruments matter too. An Employment Contract or enterprise agreement can provide more generous benefits than the minimum under legislation, but cannot undercut the statutory minimum. If your policy or contract says LSL accrues on certain kinds of parental leave, you’ll generally be bound by that promise.

It’s also worth noting that LSL is separate from annual leave. Annual leave continues to accrue during some paid absences, but LSL rules are state-based and treated differently - so avoid assuming the same rule applies to both.

How Do The Rules Differ By State And Territory?

Because LSL is state-based, it helps to know the general settings where your employee usually works. Here’s a high-level overview to illustrate how approaches can differ. Always check the specific Act for your jurisdiction (and any enterprise agreement) before making payroll decisions.

New South Wales (NSW)

Under the Long Service Leave Act 1955 (NSW), periods of paid leave (including employer-paid parental leave) generally count as service and accrue LSL. Periods of unpaid parental leave typically do not accrue LSL, but continuity of service is usually preserved for a defined period (so the employee doesn’t lose their service history).

Victoria (VIC)

Victoria’s Long Service Leave Act 2018 is comparatively generous. Broadly, up to 52 weeks of unpaid parental leave can count as service for LSL purposes (with any period beyond that generally not counted unless otherwise agreed), and paid parental leave generally accrues LSL. For worked examples and common scenarios, see how to calculate long service leave in Victoria and guidance on long service leave after 10 years in Victoria.

Queensland (QLD)

Queensland generally treats paid leave as service that accrues LSL and unpaid parental leave as not accruing LSL (with continuity preserved). If you need to check pro rata entitlements after a departure, this guide to calculating pro rata long service leave in Queensland is a practical starting point.

Western Australia (WA)

WA made significant LSL reforms in recent years. As a rule of thumb, paid parental leave generally accrues LSL. Unpaid parental leave is more nuanced; some periods may not accrue LSL but continuity is preserved. For jurisdiction-specific detail, refer to the overview of long service leave in WA.

Other Jurisdictions (SA, TAS, NT, ACT)

These jurisdictions follow similar principles, but the exact treatment of unpaid parental leave and how much counts as service (if any) can vary. Always check the LSL legislation that covers the place of work and confirm whether any enterprise agreement or policy offers a higher standard.

Key point: If the leave is employer-paid, LSL generally accrues. If the leave is unpaid (even where the government is paying Parental Leave Pay), accrual may not apply - unless your jurisdiction counts a portion of unpaid parental leave as service (as in Vic). When in doubt, check the local Act and your instruments.

How To Calculate LSL Around Parental Leave

Once you’ve confirmed whether LSL accrues during the specific type of parental leave, the next step is doing the maths correctly. Here’s a simple framework.

1) Confirm The Accrual Period

• Identify periods of employer-paid parental leave and treat them like other paid leave for LSL purposes (accrual usually continues).
• Identify periods of unpaid parental leave and determine whether your state treats any of that time as service for LSL (e.g. up to 52 weeks in Victoria) or simply preserves continuity.
• Keep these periods distinct on your payroll and HR records so your calculations are transparent and auditable.

2) Apply The Jurisdiction’s Accrual Rate

Each jurisdiction has its own formula and timing for when leave becomes available. If you employ across multiple states, you may need to apply different rules depending on where each employee ordinarily works.

If you need a sense-check, many teams find it helpful to model scenarios before finalising numbers. Using a long service leave calculator can help you stress test assumptions before you lock in payroll figures.

3) Factor In Pro Rata Entitlements On Exit

If an employee resigns or is terminated before hitting the full entitlement threshold, some jurisdictions allow a pro rata payout in limited circumstances (for example, termination due to illness or domestic necessity). Get clear on the local rules and ensure your final pay calculations correctly reflect any LSL payable at termination.

4) Check Your Contracts, Policies And Enterprise Agreements

Sometimes your own instruments are more generous than the statutory minimum - for example, a workplace policy that says LSL accrues during all parental leave, or a contract that confirms certain periods of unpaid leave count as service. If so, your documents will set the higher standard you must meet.

It’s smart to align your Parental Leave Policy and Employment Contract with your jurisdiction’s LSL rules so there’s no ambiguity for employees or payroll.

Practical Tips For Employers Managing LSL During Maternity Leave

To make this easy for your team and reduce compliance risk, consider the following practical steps.

• Set clear expectations in writing. Make sure your parental leave policy explains whether LSL accrues on paid and unpaid leave, with a note that rules are state-based.
• Track leave types precisely. Label employer-paid parental leave separately from unpaid parental leave in your HRIS or payroll, and keep start/end dates for each period.
• Preserve service continuity. Even if unpaid parental leave doesn’t accrue LSL, most jurisdictions preserve continuity - this affects when entitlements vest later.
• Coordinate return-to-work arrangements. Agree in writing how part-time arrangements, flexible work or staged returns will be handled so service and leave records stay accurate.
• Audit multi-state compliance. If you employ across jurisdictions, maintain a simple matrix of LSL rules by state (including parental leave treatment) so managers and payroll stay aligned.
• Review instruments before decisions. Before approving leave or processing payments, check the relevant Act, any enterprise agreement, and your contracts and policies to confirm accrual settings.
• Seek advice on edge cases. For complex scenarios (e.g. overlapping leave types, transfers within a group, or historical underpayments), it’s best to get tailored advice from an employment lawyer.

Common Scenarios And How They’re Treated

Here are frequent scenarios we see with employers and how many laws and instruments tend to approach them. Always confirm your local rules.

Employer-Paid Maternity Leave

Where your business pays parental leave, that period is usually treated like other paid leave - LSL generally continues to accrue. Ensure your contracts and policy clearly state the entitlement and length, and capture the period accurately in payroll.

Government Parental Leave Pay While On Unpaid Leave

When an employee receives government Parental Leave Pay but is on unpaid leave from the employer, LSL accrual typically pauses in many states (continuity preserved), except where the jurisdiction counts some unpaid parental leave as service (e.g. up to 52 weeks in Victoria). Keep documentary evidence of dates and payments to support your records.

Extended Unpaid Parental Leave Beyond 12 Months

Many jurisdictions preserve continuity of service for a defined period of unpaid parental leave (often up to 12 months), with anything beyond that not counted as service unless your policy or agreement says otherwise. If an employee requests an extension, let them know how it may affect LSL accrual and future entitlement timing.

Transfers Between Group Companies Or Locations

If an employee transfers within a corporate group or interstate, work out which jurisdiction’s LSL law applies to their service and whether service is recognised continuously. For broader mobility issues, our guide on transferring employees within group companies outlines practical legal steps to reduce risk and protect continuity.

Resignation Or Redundancy Shortly After Returning

If an employee leaves after parental leave, remember to check any pro rata LSL rules and to include all required items in their final payout. This often intersects with other entitlements and notice, so confirming your annual leave on resignation obligations helps you process final pay correctly and promptly.

Key Takeaways

• Whether long service leave accrues during maternity (parental) leave depends on state or territory LSL laws, whether the leave is employer-paid or unpaid, and any contract or policy that offers more generous terms.
• Employer-paid parental leave generally counts as service and accrues LSL; unpaid parental leave often pauses accrual but preserves continuity, with some jurisdictions (like Victoria) counting up to 52 weeks of unpaid parental leave as service.
• Confirm the rules for your jurisdiction and reflect them in your Employment Contract and Parental Leave Policy so expectations are clear and consistent.
• Track leave types precisely, preserve continuity, and apply the correct accrual rate when calculating entitlements during and after parental leave.
• On termination, check whether pro rata LSL applies and ensure final pay is accurate, factoring in jurisdiction-specific rules and any enterprise agreement.
• For multi-state or complex scenarios, getting tailored advice from an employment lawyer will reduce the risk of underpayment and disputes.

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