Long Service Leave Act 1981

The Act defines an “employee” broadly as a person who has entered into or works under a contract of service or apprenticeship with an employer, whether the contract is express or implied, oral or in writing, and whether the person is employed on salary, wages, piecework rates, as a member of a butty gang, full-time, part-time, casual, or as an outworker. A person is not excluded from being an employee merely because some or all of their pay consists of a share of the employer’s earnings or because they hire tools or equipment under a contract. The term “employer” is extended by a deeming provision: if a law governing an award deems a person to be the employer of another, that person is taken to be the employer for the purposes of this Act. “Pay” includes over-award payments, industry allowances, leading hand or qualification allowances, service grants, bonus or incentive scheme amounts usually paid with pay, and the value of free board or lodging if provided by the employer (fixed by the terms of employment or otherwise at $15 per week for board and $5 per week for lodging). It expressly excludes district allowance, site allowance, climatic allowance, overtime payments, and penalty rates. “Public holiday” adopts the definition in the Public Holidays Act 1981. “Continuous service” is the period during which the employee has served continuously with the employer, and the Act deems certain events not to break continuity: service in the Reserve Forces or Citizen Forces, national service, service in the Civil Construction Corps, an interruption or determination caused by the employer to avoid an obligation, an interruption arising from an industrial dispute where the employee returns according to the settlement terms, standing down due to slackness of trade, a break after completing an apprenticeship of up to 12 months, and any other interruption where the employee is re-employed within 2 months. Absences not on paid leave and not caused by employer avoidance do not form part of the period of employment for calculating entitlement. Where an employee is employed by a corporation and has previously been employed by a related corporation (within the meaning of the Corporations Act 2001), the periods are aggregated if continuous. A transfer of a business, undertaking, or establishment from one employer to another does not break continuity for employees who transfer, and the period with the first employer counts as service with the second. “Hours of work per week” is defined as the fixed number of hours worked per week during a year of continuous service, or if no fixed number, the average number of hours per week worked during that year, excluding overtime. “Rate of pay” is the employee’s remuneration for those hours, calculated either from the fixed rate in the terms of employment or, where there is no fixed rate or the employee is remunerated partly by other means, by dividing total pay (excluding overtime, district allowance, site allowance, climatic allowance, and penalty rates) by total hours worked (excluding overtime) during the year.

The Act applies to any person who is or has been employed in the Northern Territory on or after its commencement (10 November 1981), and it extends to periods of employment both before and after that date. However, the Act expressly excludes three categories of persons. First, it does not apply to a person in respect of whom provision for long service leave is made by another law of the Territory, the Commonwealth, or a State. Second, it does not apply to a person to whom an award applies that makes provision for long service leave; “award” is defined broadly to include an award, order, industrial agreement, or common rule declaration in force under the Workplace Relations Act 1996 (Cth). Third, the Act does not apply to a person employed in an honorary capacity. These exclusions mean that the Act operates as a default or safety-net scheme for employees who are not covered by other long service leave regimes, such as those under federal industrial instruments or other Territory legislation. Within its scope, the Act covers a very wide range of workers: full-time, part-time, casual, outworkers, and apprentices. The definition of employee is deliberately inclusive. Employers in the Territory who engage such employees are subject to the obligations to grant leave, maintain records, and make payments. The Minister is given powers to grant exemptions from the Act for an employer or class of employers if satisfied that the affected employees are entitled to long service leave benefits under a scheme that is not less favourable than the Act. The Minister may also approve alternative agreements between an individual employer and employee that provide benefits in the nature of long service leave, again on condition that the benefits are not less favourable. The Minister can revoke such approvals. Authorised persons appointed by the Minister may investigate compliance and require production of records. The Act therefore affects a range of stakeholders: employees in the private and public sectors not covered by other arrangements, their employers, the Minister, and the Northern Territory industrial relations system.

The central duty of an employer is to grant long service leave to an employee who has become entitled to it, and to pay the employee for that leave in accordance with the calculation set out in section 11. The employer must grant the leave as soon as practicable after it has accrued, having regard to the needs of the employer’s business, or on a date agreed with the employee. Unless the employee agrees otherwise, the employer must give at least 2 months’ notice of the proposed date from which the leave will be taken. The leave must be taken in one continuous period unless the employer and employee agree to split it into up to 3 separate periods, each of not less than 4 weeks. The employer must pay the amount calculated for the whole period of leave on or before the last day the employee works before the leave commences, or on the pay day immediately before the leave, as agreed. If the employee ceases employment (otherwise than by death), the employer must pay the employee the amount payable for the period of long service leave credit at that time. In the case of serious misconduct, the employer must pay at least the amount for completed periods of 10 years or 5 years only. For employees with between 7 and 10 years of continuous service who cease employment by retirement at the eligible age, termination not for serious misconduct, or illness, incapacity, or domestic or other pressing necessity, the employer must pay a pro-rata amount at 1.3 weeks per completed year. On the employee’s death, the employer must pay the personal representative the amount that would have been payable had the employee ceased employment on that date. The employer must keep and maintain records for each employee showing the employee’s name, commencement date, wages, salary or commission, hours of work per week, accrued long service leave credit, each period of leave or payment in lieu, each absence of 2 months or more, and the date of cessation if applicable. These records must be retained for 3 years after the employee ceases employment, or 6 years after all moneys owing to the legal personal representative are paid if the employee dies. The employee has the right to take the leave as accrued, but cannot engage in any other remunerative employment with duties of a kind performed in the employment from which leave was granted while on leave. The employee may agree to a different arrangement for payment timing or for postponing leave, and may agree to have the pay for postponed leave calculated at the rate of pay on the date of the agreement. The employee is not entitled to take more than 1.3 weeks for each completed year of continuous service, and the employer is not required to grant more than that.

Section 18(1) creates a general offence: a person must not contravene or fail to comply with a provision of this Act. The maximum penalty is 8 penalty units or imprisonment for 6 months. This penalty applies to any breach of the Act, including failure to grant leave, failure to pay correctly, failure to keep records, or making false or misleading statements in records. The Act provides a specific limitation period for prosecutions: notwithstanding any other law in force in the Territory, proceedings for an offence against the Act may be instituted within 3 years after the act or omission alleged to constitute the offence. This extended period overrides any shorter limitation periods that might otherwise apply under general criminal procedure. In addition to imposing a penalty, the court may order the person found guilty to make any payment or grant any leave due under the Act to the person in respect of whom the offence was committed, and may order payment of any sum the court is satisfied is due in connection with that person’s employment. This gives the court a remedial power alongside the punitive sanction. A specific provision deems an offence of contravening or failing to comply with section 14 (the record-keeping obligations) to be a regulatory offence. This classification may affect the mode of trial, evidentiary requirements, or penalty regime under the Criminal Law (Regulatory Offences) Act 1983. The Act also empowers the Minister to authorise persons to conduct investigations to ascertain whether provisions of the Act have been complied with. An authorised person may require an employer to produce records required to be kept under section 14, at a reasonable time and place specified. An employer must not fail to comply with such a request. The authorised person must, if requested by the Minister, report in writing the findings of the investigation as soon as practicable. Section 17(2) makes it an offence for an employer to do any act or thing for the purpose of, or that has the effect of, avoiding or evading an obligation imposed by the Act or defeating, evading, avoiding, or preventing its operation. This anti-avoidance provision targets schemes designed to circumvent the long service leave entitlement.

Section 6(2) sets out the primary interaction rule: the Act does not apply to a person in respect of whom provision for long service leave is made by another law of the Territory, the Commonwealth, or a State, nor to a person to whom an award applies making provision for long service leave. The definition of “award” refers to instruments under the Workplace Relations Act 1996 (Cth) as in force at the time of employment. This means that the Act operates as a residual scheme: employees covered by federal industrial awards or agreements that already contain long service leave provisions are excluded, as are employees covered by other Territory or Commonwealth laws that provide for long service leave (such as the Commonwealth Fair Work Act 2009 or the Public Sector Employment and Management Act in the Territory). The Act does not, however, exclude employees who are merely entitled to a less generous scheme under another law; the exclusion is triggered only if that scheme makes “provision for long service leave”. If the other law provides for less generous leave, the question may be whether it qualifies as “provision for long service leave” within the meaning of section 6(2). The Act also provides that it has effect notwithstanding any employment agreement that confers rights that are not as advantageous to the employee as the rights under the Act. This means that any contractual term that purports to reduce the statutory entitlement is void to the extent of any inconsistency. The Minister has the power to exempt an employer or class of employers from the Act or a provision of it if satisfied that the employees are entitled to benefits in the nature of long service leave under a scheme conducted by or on behalf of the employer that is not less favourable than those provided by the Act. This allows employers with existing private schemes (such as industry-wide long service leave funds) to be exempted from the statute, provided the alternative scheme meets the not-less-favourable standard. Similarly, the Minister may approve an agreement between an individual employer and employee that provides benefits in the nature of long service leave, again on condition that the benefits are not less favourable. Such an approved agreement displaces the statutory entitlement for that employment relationship. The Act also contains savings and transitional provisions that deem prior grants of leave under repealed ordinances to be grants under this Act, and that deduct such leave from any future entitlement. The Act does not allow an employee to obtain credit for long service leave more than once in respect of the same period of employment, preventing double-dipping across related entities or employers.

The Long Service Leave Act 1981 (Act No. 72, 1981) received assent on 18 September 1981 and commenced on 10 November 1981. It repealed three earlier ordinances: the Long Service Leave Ordinance 1965, the Long Service Leave Ordinance 1970, and the Long Service Leave Ordinance 1974. The Act has been amended by multiple subsequent enactments. The Criminal Law (Regulatory Offences) Act 1983 (assented 28 November 1983, commenced 1 January 1984) amended section 18. The Long Service Leave Amendment Act 1984 (assented 20 July 1984, commenced 1 February 1989) amended sections 6, 8, 10, 11, and 14, and inserted section 18A (limitation of time for prosecution). The Companies and Securities (Consequential Amendments) Act 1986 (assented 30 June 1986, commenced 1 July 1986) amended section 12. The Corporations (Consequential Amendments) Act 1990 (assented 14 December 1990, commenced 1 January 1991) further amended section 12. The Sentencing (Consequential Amendments) Act 1996 (assented 19 April 1996, with section 7 commencing on that date and the remainder on 1 July 1996) amended section 18. The Long Service Leave Amendment Act 1997 (assented 2 June 1997, commenced 1 July 1997) made substantial amendments to sections 7, 8, 10, and 14, and substituted a new section 11. Statute Law Revision Act 1998 (assented and commenced 30 March 1998) amended section 10. The Corporations Reform (Consequential Amendments NT) Act 2001 (assented 29 June 2001, commenced 15 July 2001) amended section 12. Statute Law Revision Act (No. 2) 2001 (assented and commenced 11 December 2001) amended section 7. Statute Law Revision Act (No. 2) 2004 (assented 15 September 2004, commenced 27 October 2004) made amendments to sections 6, 7, 10, 12, 13, 14, 15, 16, 17, and 18. The Penalties Amendment (Miscellaneous) Act 2013 (assented 12 July 2013, commenced 28 August 2013) amended section 18, and the Statute Law Amendment (Directors’ Liability) Act 2015 (assented 18 September 2015, commenced 14 October 2015) also amended section 18. The version as in force at 14 October 2015 incorporates all these amendments.

The provided text of the Long Service Leave Act 1981 contains no references to court judgments, judicial decisions, or litigation. The Act itself does not cite any cases, nor does the endnotes or any other part of the source include case names or statutory interpretation rulings. Accordingly, based solely on the source material, no litigation history can be derived. It is possible that the Act has been the subject of judicial interpretation in the Northern Territory courts, particularly regarding the meaning of “continuous service”, the calculation of the pro-rata entitlement, or the application of the serious misconduct provisions. The limitation period under section 18A (3 years) may have been tested in proceedings. The offence provisions, including the regulatory offence classification for record-keeping breaches, may have been considered by magistrates. However, without any reference in the source text, this deep dive cannot report on such cases. A legal practitioner relying on this Act would need to conduct independent research into Northern Territory and, where applicable, appellate decisions to ascertain how the courts have construed key terms such as “serious misconduct”, “domestic or other pressing necessity”, and “not less favourable benefits” for the purposes of exemption or approval. The absence of cited case law in the source does not imply that the Act is untested; rather, the source simply does not provide that information.

Several provisions in the Act create traps for the unwary. The pro-rata entitlement under section 10(2) only applies to employees who have completed at least 7 but less than 10 years of continuous service, and only if the cessation is for one of the specified reasons: retirement at or after the eligible age, termination by the employer for a reason other than serious misconduct, or cessation on account of illness, incapacity, or domestic or other pressing necessity of such a nature as to justify leaving. An employee who resigns voluntarily after 8 years without meeting those conditions receives nothing. The serious misconduct provision in section 10(1A) reduces the payout to completed blocks of 10 years or 5 years only, even if the employee has accrued a credit beyond those blocks. For example, an employee dismissed for serious misconduct after 14 years of service would be entitled only to 10 years’ worth of payment, not 14. The definition of “rate of pay” uses the rate on the day immediately preceding cessation or leave, not an average over the period of service. This can produce windfalls or shortfalls if the employee’s rate has changed significantly. Hours of work per week are calculated for each year separately, using the fixed or average hours for that year excluding overtime. This means a pattern of fluctuating hours can produce a different total entitlement than a simple average over the whole period. Public holidays falling during long service leave are counted as part of the leave, not added on top. An employee on long service leave cannot engage in any other remunerative employment with duties of a kind performed in the employment from which the leave was granted. This is a strict prohibition, and breach could have consequences for the employee’s entitlement or the employer’s obligation. The record-keeping obligations require employers to maintain particulars of “periods of prior qualifying service” and each absence of 2 months or more. Failure to keep these records for the required periods (3 years after cessation, 6 years for deceased employees) is an offence. The power of the Minister to revoke an approved agreement under section 8(5A) is discretionary and not limited by the terms of the agreement; a reliance on an approval could be lost. The continuity provisions deem certain absences not to break service, but they also provide that periods of absence not on paid leave (other than absences caused by employer avoidance) do not form part of the period of employment. This means that an extended unpaid absence can preserve continuity (if the employee returns within 2 months or comes within one of the specified exceptions) but the time does not count toward the 10-year or 5-year thresholds. The transfer of business provisions apply to transmission, conveyance, assignment, or succession, but require that the employee actually transfers their employment; a dismissal and re-hire by a new entity may not qualify if it does not meet the factual continuity test.

An employer subject to the Long Service Leave Act 1981 should take a systematic approach to compliance. The first step is to determine whether the Act applies to each employee. If the employee is covered by another law of the Territory, the Commonwealth, or a State that makes provision for long service leave, or if an award applies that contains long service leave provisions, then the Act does not apply. Similarly, honorary employees are excluded. For employees who are within scope, the employer must record the date the employee commenced employment, the wages, salary or commission paid, and the number of hours of work per week. For each year of continuous service, the employer should calculate the fixed or average hours worked per week (excluding overtime) and the rate of pay as defined, to be able to compute the entitlement. The employer must keep a running record of the accrued long service leave credit, each period of leave taken or paid out, and each absence of 2 months or more. When an employee reaches 10 years of continuous service, the employer must arrange for the leave to be taken as soon as practicable or on an agreed date, giving at least 2 months’ notice unless the employee agrees otherwise. The leave should be paid for in advance on the last working day or the pay day before leave starts, unless the parties agree otherwise in writing. The amount payable is calculated using the formula RP x HWW x 1.3 for each completed year of continuous service from which the entitlement is derived. The rate of pay is the employee’s rate on the day immediately preceding the leave or, if the leave is postponed by agreement, the rate on the date of that agreement. Payment can be made by cheque posted to a specified address if the parties so agree. If the employee ceases employment (other than by death), the employer must pay out the long service leave credit as soon as practicable. If the cessation is due to serious misconduct, the employer should pay only for completed periods of 10 years or 5 years and no more. For employees with between 7 and 10 years of service who cease employment due to retirement at the eligible age, termination not for misconduct, or pressing necessity, the employer must pay a pro-rata amount. On the employee’s death, the employer must pay the personal representative upon request. The employer must retain records for at least 3 years after the employee ceases, or 6 years after all moneys are paid in the case of death. The employer should also consider whether the employee’s service is continuous under the Act, including through related corporations or business transfers, and must not pay out leave except as permitted by section 10(4). If the employer wishes to operate a separate long service leave scheme, an application for exemption under section 13 or approval of an agreement under section 8(5) should be made to the Minister, providing evidence that the benefits are not less favourable than those under the Act.