Long Service Leave After 10 Years in Victoria: Employer’s Guide

If you employ staff in Victoria, you’ve likely heard a lot about long service leave (LSL). It rewards loyalty and service - and it’s tightly regulated. Getting LSL right is essential for compliance, cash flow planning and team morale.

Here’s the key thing many employers miss: in Victoria, employees don’t just “become entitled” at 10 years. Under the Long Service Leave Act 2018 (Vic), employees start acquiring long service leave from day one, and once they reach seven years of continuous employment, they can take their accrued LSL. At 10 years (and beyond), that entitlement continues to grow.

In this guide, we’ll unpack how LSL accrues in Victoria, what happens at 10 years, how to calculate and pay it, what counts as continuous service, and the practical steps you can take to stay compliant and avoid disputes.

What Is Long Service Leave In Victoria?

Long service leave is a paid break from work available to Victorian employees who have completed a lengthy period of continuous service with the same employer. It applies to full-time, part-time and eligible casual employees (provided their service is continuous).

The Act sets a minimum standard that you can’t go below. Some enterprise agreements, awards or contracts may provide more generous LSL. If there’s a difference, you must apply whichever entitlement is more beneficial to the employee.

How LSL Accrues In Victoria

• Accrual Rate: LSL accrues at approximately 0.8667 weeks for each completed year of continuous service (that is, 1/60 of the employee’s total period of continuous employment).
• Taking LSL From 7 Years: Once an employee reaches seven years of continuous service, they can request to take their accrued LSL. They do not need to wait until 10 years.
• Ongoing Accrual Beyond 10 Years: After 10 years, accrual continues at the same rate. The entitlement does not “reset” at 10 years - it keeps building.

For a quick sense-check on figures, many employers use a long service leave calculator alongside their payroll system (but remember, your obligations are ultimately governed by the Act).

How Does Long Service Leave Work After 10 Years In Victoria?

At the 10-year milestone, most Victorian employees will have accrued around 8.6667 weeks of LSL (10 years x ~0.8667 weeks). From there, they keep accruing further weeks for each additional year of service.

Standard Entitlements At 10 Years

• Minimum Leave: About 8.6667 weeks of paid LSL after 10 years of continuous service.
• Further Accrual: Roughly 0.8667 weeks for each completed year after 10.
• Applies To All Employment Types: Full-time, part-time and eligible casual employees accrue LSL based on their continuous service.
• Taking Leave: Employees can take LSL in one continuous period or in multiple periods by agreement. The Act allows flexibility - including taking it in smaller blocks - provided you and the employee agree.

Pay Rate For LSL: Use The Act’s “Greater Of” Averaging Rules

LSL must be paid at the correct ordinary rate. In Victoria, the Act uses “greater of” methods to fairly capture an employee’s normal earnings and hours, particularly where hours or pay vary over time.

• Ordinary Pay: Usually excludes overtime and true one-off bonuses. However, some regular allowances that form part of ordinary time earnings can be included. The Act requires you to calculate ordinary pay using the prescribed averaging methods and then apply the most favourable outcome for the employee.
• Ordinary Hours: Where hours vary, determine ordinary hours using the statutory “greater of” average over relevant reference periods (for example, the last 12 months or the last 5 years), noting the method the Act prescribes for your employee’s circumstances.

In practice, check your payroll settings align with the Act’s averaging rules and, where needed, have a professional double-check more complex cases (e.g. variable rosters, allowances, or recent changes to hours).

Example: LSL After 12 Years

An employee completes 12 years of continuous service and hasn’t taken any LSL.

• Accrued LSL = 12 x 0.8667 weeks ≈ 10.4 weeks.
• Pay Rate = Calculate using the Act’s “greater of” averaging methods to ensure their ordinary rate and ordinary hours reflect the most favourable average.

Note: Public holidays falling during a period of LSL are generally not counted as LSL (the leave is extended by the public holiday day). Ensure your payroll system handles this correctly.

What Counts As “Continuous Service” For LSL In Victoria?

Continuous service is critical for LSL. In short, the employment relationship must be ongoing. That said, the Act recognises that employees may have time away from work without breaking continuity.

Absences That Don’t Break Continuity (But May Or May Not Count Toward Accrual)

• Paid Leave: Annual leave, paid personal/carer’s leave and public holidays typically do not break continuity and generally count as service.
• Unpaid Parental Leave: Does not usually break continuity, but in most cases unpaid periods don’t count towards LSL accrual (there are detailed rules and limited exceptions).
• Injury/Illness (Including Approved WorkCover Absences): Does not usually break continuity. Whether the absence counts toward accrual depends on the type and whether it’s paid - check the Act’s specific provisions.
• Authorised Absences: Community service leave, jury service and similar authorised leave won’t generally break continuity.
• Stand Downs Or Other Lawful Absences: Lawful stand downs and agreed periods away from work generally do not break continuity.

Complex scenarios - like business sales, changes of ownership, secondments or periods of casual engagement interspersed with regular work - can be tricky. When in doubt, get tailored advice and ensure your Employment Contract reflects how service and leave are recognised in your workplace.

Pro Rata LSL In Victoria From 7 Years (Including On Termination)

From seven years of continuous service, Victorian employees have two important rights: they can request to take their accrued LSL, and they’re entitled to a pro rata LSL payout if their employment ends after seven years.

Pro Rata Payment On Termination

• After 7 Years: If employment ends after seven years of continuous service, any accrued but untaken LSL must be paid out on a pro rata basis.
• No “Serious Misconduct” Carve-Out: In Victoria, pro rata LSL still applies after seven years regardless of the reason for termination. The “serious misconduct” exception that exists in other jurisdictions does not apply under the Victorian Act.
• After 10 Years: If employment ends at or beyond 10 years, all accrued and untaken LSL must be paid out in full.

Example: Resignation At 8 Years And 4 Months

Service = 8.33 years. Accrued LSL ≈ 8.33 x 0.8667 = about 7.22 weeks. On termination, you must pay the pro rata entitlement using the correct ordinary pay and ordinary hours calculations set by the Act.

Make sure pro rata LSL is included when you prepare a final pay. A helpful way to check all components are covered is to work through your usual termination checklist together with guidance on calculating final pay.

Redundancy And LSL

Where an employee is made redundant after seven years, any accrued LSL must be paid out, in addition to any redundancy entitlements under the Fair Work Act or an applicable instrument. If you’re forecasting a restructure, build LSL into your costings alongside your standard redundancy calculations. If you need a refresher on the concepts, see this overview on how to calculate redundancy payments.

Managing Long Service Leave In Your Business

LSL is manageable with the right systems. A little structure now will save you headaches later.

1) Keep Meticulous Service And Leave Records

• Track Start Dates And Employment Type Changes: Record every change (e.g. full-time to part-time, or casual to permanent) and keep evidence.
• Log All Breaks In Service: Note paid and unpaid absences, parental leave and WorkCover periods so you can determine whether they count towards accrual.
• Retain Records: Maintain records for at least the legally required period. In a dispute, accurate records are your best defence.

2) Configure Your Payroll To The Act

• Accrual Calculations: Confirm your system accrues LSL at the Victorian rate and applies the correct “greater of” averaging rules when employees take LSL or when it’s paid out on termination.
• Public Holidays And Split Periods: Ensure your payroll accounts for public holidays during LSL and can process leave in multiple periods when you and an employee agree.

3) Have Clear, Written Processes

• Policy: Create a simple leave policy that covers eligibility, notice, how to request LSL, how it can be taken (e.g. in blocks) and how payment will be made. A tailored Workplace Policy helps set expectations and reduce disputes.
• Employment Contracts: Reference LSL in your contracts and ensure they work alongside the Act and any applicable award or enterprise agreement. If you’re updating your templates, start with a robust Employment Contract and then layer in your policies.

4) Budget For LSL Liability

• Forecast Cash Flow: LSL can be a material liability, particularly for long-serving staff. Forecast likely leave-taking windows and carry sufficient provisions.
• Plan Staffing: When employees take extended leave, plan ahead to maintain service levels - temporary backfills or reallocation can help manage workloads.

5) Communicate Early And Often

• Provide Regular Balance Updates: This builds trust and helps employees plan time off, which makes rostering and continuity easier for you.
• Reasonable Requests: The Act expects employers to be reasonable. Employees should give adequate written notice (often at least 12 weeks). If operational issues arise, discuss options in good faith and document agreed arrangements.

Common Pitfalls To Avoid (And How To Fix Them)

Most LSL problems can be traced back to misunderstandings about accrual, continuous service, or pay calculations. Here are the big ones to avoid.

Thinking Entitlement Starts Only At 10 Years

In Victoria, employees can request to take LSL from seven years. Waiting until 10 years risks non-compliance and employee dissatisfaction. Make sure your policy and payroll reflect the seven-year entitlement to take leave.

Missing Pro Rata Payments After 7 Years

When employment ends after seven years, a pro rata LSL payout is required (regardless of the reason for termination). Build this into your offboarding process. If you use a checklist or pack to manage exits, include a line item for LSL alongside your termination documents.

Calculating Pay At The Base Rate Only

The Act uses “greater of” averaging methods to determine ordinary pay and ordinary hours, particularly where hours or pay vary. Don’t just pay the current base rate. Configure your payroll to apply the statutory averaging rules and, where needed, have an expert review edge cases.

Misunderstanding Continuous Service

Unpaid parental leave doesn’t usually break continuity but often doesn’t count toward accrual. Injury or illness doesn’t typically break continuity either. Keep detailed records so you can apply the nuances correctly for each employee.

Not Documenting Agreed Split Periods

LSL can be taken in multiple periods if you and the employee agree. Confirm arrangements in writing (email is fine) - especially where you’ve agreed to several shorter breaks rather than one long period.

Forgetting The Public Holiday Rule

Public holidays that fall during a period of LSL generally don’t count as LSL. The leave is extended or paid accordingly. Set this up correctly in your payroll and leave approvals.

Leaving It All To Payroll Software

Your system is only as accurate as its configuration. Review your LSL settings at least annually and after any legislative updates. If you make changes to rosters, allow for a quick compliance check before the next LSL request or payout.

FAQs: Quick Answers For Victorian Employers

Can Employees Take Long Service Leave In Parts?

Yes - in Victoria, LSL may be taken in multiple periods if you and the employee agree. Many employers accommodate reasonable requests for smaller blocks to suit family, health or study commitments while maintaining operational coverage.

How Much Notice Should Employees Give?

The Act expects reasonable notice. A common practice is around 12 weeks’ written notice for planning purposes. If an employee has a special circumstance, handle requests case-by-case and document any agreed variations.

Can We “Cash Out” LSL Instead Of Taking Time Off?

Generally no, except when the employment ends (e.g. resignation, redundancy, dismissal). During employment, LSL is a leave entitlement to be taken as time off, not paid out in lieu.

Do Casuals Get LSL In Victoria?

Yes, if their service is continuous. Regular and systematic casual employment can count toward LSL. Apply the Act’s rules to determine continuous service and calculate ordinary hours using the averaging methods.

What Should We Include In Final Pay?

Include all wages owed to the last day, untaken annual leave, any payable notice or termination amounts under your instrument, and any LSL that is due (pro rata after seven years or full accrual after 10). If you’re working through an exit, cross-check with guidance on final pay calculations so nothing is missed.

What About Redundancies?

For redundancies, pay any accrued LSL in addition to redundancy entitlements required by the Fair Work Act or your instrument. Build LSL into the timing and cash flow of the restructure and make sure letters and packs reflect the correct amounts (including where your termination documents are being prepared for a group of employees).

Should Our Contracts And Policies Say Anything About LSL?

Yes. Well-drafted contracts and policies help prevent disputes and set expectations. At a minimum, ensure your Employment Contract and Workplace Policy address leave processes, notice and how LSL is managed in your business (while making clear that the Act prevails where required).

Key Takeaways

• In Victoria, long service leave accrues from day one and can be taken from seven years of continuous service; it keeps accruing beyond 10 years.
• At 10 years, most employees have around 8.6667 weeks of LSL, with about 0.8667 weeks accruing for each year after that.
• On termination after seven years, pro rata LSL must be paid out regardless of the reason for the employment ending.
• Pay LSL using the Act’s “greater of” averaging methods for ordinary pay and ordinary hours - not just the current base rate.
• Continuous service has nuances (e.g. unpaid parental leave usually doesn’t break continuity but may not count toward accrual). Keep detailed, accurate records.
• Policies, contracts and payroll settings should work together. Confirm your systems handle split periods, public holidays and variable hours compliantly.
• Include LSL in final pay and redundancy planning, and document agreed arrangements in writing to avoid disputes.

If you’d like a consultation about managing long service leave in Victoria - from policies and contracts to termination packs - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.