The team at the HR in Practice service has recently received a number of enquiries from members regarding the ‘cashing out’ of long service leave (LSL).

Specifically, this involves being paid out LSL as a financial sum in place of taking time off. This is not the same as being paid out leave when leaving a job.

This article will discuss the provisions around cashing out long service leave in each state and territory. (An employee’s entitlement to LSL is derived from state/territory legislation rather than the Fair Work Act 2009 or the Health Professionals and Support Services Award 2020.)

Note that this article will solely address cashing out LSL and not the additional conditions around the entitlement (including when employees gain access  and  the length of such an entitlement).

New South Wales

In NSW, most workers derive their entitlement from the Long Service Leave Act 1955 (NSW).

The NSW legislation does not contain any provisions that allow an employee to be paid for their LSL without actually taking some time off.

For this reason, cashing out LSL in NSW is prohibited, regardless of the fact that it may be to an employee’s benefit.

Victoria

In Victoria, most employees derive their entitlement from the Long Service Leave 2018 (VIC).

It constitutes an offence under the law in Victoria for an employee to cash out their LSL. Employers and employees who do so may be subject to civil and criminal penalties.

Australian Capital Territory

In the ACT, the Long Service Leave Act 1976 (ACT) provides employees with their entitlement to LSL.

An employee must actually take the period as leave and may not receive a payment in lieu. In other words, employees in the ACT cannot cash out their LSL.

Queensland

In Queensland, most employees derive their entitlement to LSL from the Industrial Relations Act 2016 (QLD).

In the state, employees may be eligible to cash out their LSL if the award, enterprise agreement or certified agreement allows them to do so; or they make an application to the Queensland Industrial Relations Commission for an order allowing them to do so.

The Health Professionals and Support Services Award 2020, which applies to the majority (if not all) employees in a physiotherapy practice, does not contain any such provisions.

Therefore, the only option available to employees in Queensland is to make an application to the Queensland Industrial Relations Commission.

Such applications may only be made on compassionate grounds or on the grounds of financial hardship, and can only be submitted once an employee has gained access to the entitlement.

To submit an application, an employee must complete a form F13, available from the Queensland Industrial Relations Commission.

South Australia

For the majority of workers, the entitlement to LSL in South Australia comes from the Long Service Leave Act 1987 (SA).

Under the Act, an employer and employee may make an agreement for the employee to receive a payment in lieu of some or all of their entitlement.

In other words, employees in SA can cash out their LSL. Such an agreement must be recorded in writing and be kept on an employee’s file.

Western Australia

In Western Australia, the bulk of employees derive their entitlement to LSL from the Long Service Leave Act 1958 (WA).

In the state, an employer and employee may make an agreement for the employee to receive a payment in lieu of some or all of their entitlement.

In other words, employees in WA can also cash out their LSL. Such an agreement must be recorded in writing  and deliver a benefit to the employee.

Northern Territory

In the NT, the Long Service Leave Act 1981 (NT) is the piece of legislation that governs the entitlement for the majority of workers.

Employees are not permitted to receive a payment in lieu of taking their LSL, other than where they have an entitlement for pro-rata or unused leave on termination.

Tasmania

The Long Service Leave Act 1976 (TAS) provides the entitlement for LSL for Tasmanian workers.

Section 10 of the Act outlines that an employee may elect to receive a payment in lieu of taking a period of LSL by agreement with their employer. Any such agreement must be recorded in writing, including the dates the payment is intended to cover.

In short, NSW, Victoria, the ACT,  and the NT,  employees may not cash out their LSL. In Queensland, South Australia, Western Australia and Tasmania, employees can cash out their LSL— provided they meet the relevant criteria.

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