Long Service Leave Act 1987

The Act’s primary subjects are “workers” and “employers” as defined in s 3(1). A worker is any person employed under a contract of service; an employer is the person by whom that worker is employed. The definition is deliberately broad and captures full-time, part-time, casual and commission-based staff. However, s 16 carves out those whose LSL entitlements arise under another South Australian statute, a fair work instrument under the Fair Work Act 2009 (Cth), or a continuing federal transitional instrument. Consequently, many award-covered or enterprise-agreement-covered employees in the private sector are regulated by those instruments rather than this Act.

“Related corporations” and “related employers” are also directly affected. Section 3(3) treats corporations as related if one acquires the business of the other, if they are related under the Corporations Act 2001 (Cth), or if a chain of such relationships exists. Service with related employers is treated as continuous (s 5 and the definition of “service”). When a worker moves between related employers, records must be transferred (s 10(4)).

Inspectors appointed under the Fair Work Act 1994 (SA) (as amended) exercise statutory powers of entry, record production and questioning (s 11). SAET is the adjudicative body for exemption applications (s 9), review of inspector notices (s 12), and direct orders for grant of leave or payment (s 13). Registered associations (unions or employer organisations registered under State or federal legislation) may apply for exemptions or, with worker consent, bring s 13 proceedings.

Employers who provide accommodation, pay by commission, or employ on variable hours must apply the specialised averaging rules in s 3(2). Employers who wish to grant leave in anticipation, in instalments, or on shortened notice must obtain worker agreement (s 7(4)). Workers who take LSL in anticipation and whose employment ends before the entitlement fully accrues face potential deduction (s 7(6)). Workers must not engage in other employment while on LSL (s 14(1)), and employers must not knowingly facilitate such double-dipping (s 14(2)).

Personal representatives of deceased workers are entitled to receive any accrued but unpaid LSL (s 5(5)) and may apply to SAET under s 13(2)(b). The Act therefore affects estates and executors.

Finally, the 2015 and 2016 amendments altered the classes of workers affected by changing the averaging rules and substituting SAET for the former Industrial Relations Court and Commission. The net result is that the Act now speaks predominantly to non-federally covered employees in South Australia, while maintaining a residual role for those under State awards or unregistered individual contracts.

Worker rights

• Entitlement to 13 weeks LSL after 10 years and 1.3 weeks per additional year (s 5(1)).
• Pro-rata payment on termination after seven years unless serious and wilful misconduct or unlawful worker termination (ss 5(3)–(4)).
• Payment at ordinary weekly rate, with accommodation value added where relevant (s 3(2)(c) and s 8).
• Right to inspect own records during office hours (s 10(5)).
• Right to receive a prescribed statement before taking leave or upon payment in lieu (ss 10(6)–(7)).
• Election between this Act and a corresponding law where dual entitlement exists (s 4(2)).
• Ability to agree to deferral, instalments, shortened notice or prospective taking of leave (s 7(4)).

Employer duties

• Grant leave “as soon as practicable” having regard to business needs after the entitlement arises (s 7(1)).
• Provide at least 60 days’ notice of the leave date unless agreement varies this (s 7(3)).
• Pay at the ordinary weekly rate, adjusting for rate variations during leave (s 8(3)).
• Make payment in lieu on termination immediately (s 8(4)).
• Keep comprehensive records for the employment period plus three years, including a separate written and signed record of any agreement to pay in lieu (s 10(1)–(2a)).
• Transmit records to a related employer on transfer (s 10(4)).
• Comply with inspector directions or face strict liability offence (s 12).
• Refrain from employing a worker on LSL in the same role (s 14(2)).

Mutual rights

• Agreement to payment in lieu once entitlement has accrued (s 5(1a)), which must be recorded in writing, signed and copied to the worker.
• SAET determination that an award, agreement or scheme replaces the Act’s entitlements, provided no disadvantage (s 9).

Inspector and SAET powers

• Inspectors may enter premises, demand records, copy them, and question any person (s 11).
• SAET may order grant of leave or payment, accept worker allegations as prima facie correct where records are deficient (s 13(3)), review inspector notices, grant or revoke exemptions, and make orders as to costs or interest (implicit in its general jurisdiction under the South Australian Employment Tribunal Act 2014).

The Act creates a tiered penalty regime. The most serious offences attract a maximum of $5,000: obstructing an inspector (s 11(3)), failing to comply with an inspector’s direction to grant leave or pay an amount (s 12(6)), and (for workers) engaging in other employment while on LSL (s 14(1)). Record-keeping breaches under s 10(1), (2a) or (4) carry a $1,000 maximum, while failure to supply the prescribed statement to the worker is only $200 (s 10(6)–(7)).

All offences are summary (s 15(1)) and must be prosecuted within three years (s 15(2)). A defence exists to a charge under s 12(6)(a) if the employer proves the worker was not in fact entitled (s 12(7)).

Civil enforcement is at least as important as criminal. Under s 13, SAET may order an employer (or former employer) to grant leave or make payment on application by the worker, their personal representative, a registered association with consent, or the complainant in prior inspector proceedings. There is a three-year limitation period running from termination (s 13(4)). Where the employer has failed to keep proper records, SAET may reverse the onus and accept the worker’s allegation as to length of service or average hours unless the employer proves otherwise (s 13(3)). This evidentiary presumption is a powerful lever.

Inspector notices under s 12 operate as a fast-track administrative remedy. The employer may seek SAET review within 14 days, which suspends the notice pending determination. Non-compliance after review (or failure to seek review) triggers the criminal offence.

Exemptions under s 9 are policed by SAET’s power to revoke where the employer has not honoured the substituted scheme or where continuation is otherwise inappropriate (s 9(6)). Once revoked, the statutory entitlements revive.

The Act is deliberately designed to sit alongside, and yield to, the federal industrial relations system. Section 16 excludes workers who have an LSL entitlement under a fair work instrument or a continuing federal transitional instrument. Definitions of “agreement”, “award”, “enterprise agreement” and “registered association” expressly pick up Commonwealth concepts (s 3(1)), reflecting the 2009 Statutes Amendment (National Industrial Relations System) Act.

Section 4(2) prevents double dipping by requiring election between this Act and any “corresponding law” of the Commonwealth, another State, Territory or foreign country. This is particularly relevant for interstate employees or fly-in/fly-out mining workers.

The calculation provisions reference the Return to Work Act 2014. Weeks of absence on workers compensation are disregarded when averaging earnings or hours (s 3(4)), preventing distortion of the ordinary rate. The 2015 amending Act expanded these disregarding rules and applied them to both pre- and post-commencement absences for any LSL taken after 19 November 2015.

Relationship with the Corporations Act 2001 (Cth) arises through the definition of related corporations (s 3(1)), which imports the s 50 Corporations Act test. This ensures that corporate groups cannot easily fragment service by moving employees between subsidiaries.

The South Australian Employment Tribunal Act 2014 now supplies the procedural machinery. References to the former Industrial Relations Commission and Court were replaced by SAET in 2016, with transitional provisions preserving existing orders and allowing pending matters to be transferred (Statutes Amendment (South Australian Employment Tribunal) Act 2016, s 118). SAET’s broad powers under its own Act therefore govern costs, interest, and procedural fairness in LSL disputes.

The Act does not displace contractual entitlements that are more generous. An individual agreement or enterprise agreement may provide superior LSL but cannot lawfully reduce the statutory floor for employees who fall inside the Act’s coverage.

Finally, the Fair Work Act 2009 (Cth) interaction is ongoing. Because many private-sector employees are now covered by federal modern awards or enterprise agreements that contain their own LSL clauses, the practical reach of the South Australian Act has narrowed. However, for employees outside the federal system (certain public sector, sole traders, some small not-for-profits), the 1987 Act remains the governing instrument.

The most significant recent amendments are:

• Long Service Leave (Calculation of Average Weekly Earnings) Amendment Act 2015 (commenced 19 November 2015). This inserted s 3(4) and amended s 3(2) to refine the treatment of unpaid leave and workers compensation absences when averaging. The change was driven by practical difficulties employers faced in calculating rates where workers had long periods on compensation. The transitional provision (Sch 1) makes the new method apply to any LSL taken or paid after commencement, even if the absences occurred years earlier. This removed windfall gains or losses that had arisen under the previous rigid 12-month or three-year calendar look-back.

• Statutes Amendment (South Australian Employment Tribunal) Act 2016 (relevant provisions commenced 1 July 2017). This substituted “SAET” for the former Industrial Relations Commission and Court throughout the Act, transferred jurisdiction, and gave SAET power to adopt prior findings, transcripts and orders. The reform was part of a broader State project to consolidate industrial and employment tribunals into a single accessible body, reducing forum confusion and aligning with the model in other jurisdictions.

• Earlier but still influential was the Statutes Amendment (National Industrial Relations System) Act 2009, which updated definitions to reflect the Fair Work regime and narrowed the Act’s coverage.

These changes reflect two policy drivers: (1) modernisation of rate-calculation methodology to accommodate contemporary patterns of intermittent absence and flexible work; and (2) institutional efficiency by replacing fragmented industrial relations bodies with SAET. The amendments have not altered the headline 13-week/10-year ratio, preserving the Act’s original bargain while smoothing its interface with federal law and contemporary labour-market realities.

Because most LSL disputes are resolved in SAET rather than superior courts, reported appellate authority is modest. Nevertheless, several recurring controversies appear in the case law and commentary.

First, the meaning of “continuous service” has generated dispute. In cases involving lengthy unpaid leave or stand-downs, employers have argued that s 6(1) does not preserve continuity where the break exceeds “reasonable” limits. SAET has generally read the paragraph (i) two-month re-employment rule strictly but has used its discretion under s 6(1)(a) where court or tribunal reinstatement orders are involved.

Second, the calculation of ordinary weekly rate for casual or intermittent workers has been litigated. Prior to the 2015 amendments, employers sometimes contended that the three-year averaging period should include only weeks actually worked, producing artificially high hourly rates. The 2015 amendments and the gross-up mechanism in s 3(4) were designed to resolve that controversy, but transitional cases continued to test the boundary between “unpaid leave” and “absence on account of work injury”.

Third, the interaction with federal instruments has produced jurisdictional arguments. Employers have sought s 9 exemptions or argued s 16 exclusion where an enterprise agreement is silent on LSL, claiming the National Employment Standards “safety net” implicitly displaces the State Act. SAET has rejected blanket displacement, requiring the federal instrument to contain an actual LSL entitlement before s 16 is engaged.

A notable controversy concerns payments in lieu by individual agreement under s 5(1a). Critics argue the provision, inserted in 1997, undermines the original purpose of forcing employers to grant actual time off. SAET has insisted that the agreement must be made after the entitlement accrues and must be genuinely voluntary; otherwise the payment is treated as a termination payment under s 5(2) rather than an agreed in-lieu payment, affecting tax and superannuation treatment.

The evidentiary presumption in s 13(3) has also been challenged on natural justice grounds. Employers argue that reversing the onus when records are deficient amounts to punishment for poor administration. SAET has countered that the presumption is rebuttable and exists precisely because the employer controls the records; failure to keep them cannot prejudice the worker.

No High Court authority directly construes the 1987 Act, but principles from federal LSL cases (e.g., Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 on the meaning of “continuous service” under the Fair Work Act) are routinely cited by analogy, especially on whether authorised absences break continuity.

Most practitioners miss several subtle traps:

• Accommodation loading is ignored for payments in lieu but added for actual leave. Section 3(2)(c) increases the ordinary rate for leave purposes, yet s 8(3a)(a) expressly excludes the value of accommodation from the rate used for agreed payments in lieu. Employers who provide housing can therefore face a higher cost if the worker insists on taking the leave rather than cashing it out.

• The three-year limitation in s 13(4) runs from termination, not from when the entitlement first arose. A worker who completes 15 years, takes no leave, and is terminated 2.9 years later can still claim the full 13 + 6.5 weeks. Many employers assume the limitation runs from each 10-year anniversary and are caught out.

• Section 7(6) deduction on early termination after anticipated leave is not automatic. The employer may deduct the difference, but must do so from “any remuneration payable on the termination”. If the only money payable is the LSL itself, the provision can become circular. SAET has required employers to quantify the exact overpayment before making any deduction.

• Record transmission obligation on related-employer transfer (s 10(4)) carries a $1,000 penalty but no explicit indemnity. The new employer inherits any deficiencies in the old records yet remains bound by the three-year retention rule. In corporate restructures, due diligence on LSL records is therefore critical.

• Casual workers are not paid at a “penalty rate” for the purpose of the averaging rule (s 3(2)(b)). Even though their loading may be described as a casual loading in lieu of leave, the Act requires the base rate (exclusive of that loading) to be used. This can produce surprising results when converting casual service to an equivalent full-time LSL entitlement.

• Transitional application of the 2015 averaging rules is retrospective in effect. Because the new method applies to any LSL taken after 19 November 2015, a worker whose service spanned decades of compensation absences may suddenly become entitled to a higher (or lower) rate than the employer’s long-standing payroll system calculated.

• SAET’s power under s 13(3) to accept the worker’s allegation “in the absence of proof to the contrary” is triggered merely by a finding that records are not “proper”. Poorly formatted spreadsheets or missing hours data have been held sufficient to flip the onus, even where the employer can produce some evidence.

These gotchas explain why seemingly straightforward LSL payouts frequently generate disputes or unexpected financial exposure.

Compliance begins with accurate classification. Determine whether the worker falls inside or outside the Act by checking coverage under any federal fair work instrument or other South Australian statute. If inside, map the worker’s entire service history against the s 6 continuity rules, noting which absences are counted and which are disregarded.

Maintain an electronic LSL register that automatically applies the s 3(2) averaging rules. The system must be capable of: (a) excluding unpaid leave and compensation weeks then grossing-up the 12-month or three-year period; (b) applying the accommodation loading only where relevant; and (c) producing the prescribed statements required by s 10(6) and (7). Retain these records for the employment duration plus three years and ensure any related-employer transfer includes a complete hand-over.

Implement a written LSL policy that mirrors the statutory language on notice, business needs, and agreement options under s 7(4). Require any agreement to take leave in anticipation, in instalments, or to receive payment in lieu to be recorded on a separate signed form that is countersigned by the worker and retained for the full retention period.

Train managers to recognise when an entitlement is about to crystallise (seven years for pro-rata on termination risk, 10 years for full entitlement). Schedule proactive discussions at least 60 days before any planned leave date. Where business needs require deferral, document the business case and obtain worker agreement in writing.

For terminations, calculate the exact payment due under s 5(2) or (3) on the day of termination and pay it immediately. If the worker has taken anticipated leave, perform the s 7(6) reconciliation before final pay is processed. In death cases, treat the entitlement as an estate debt and respond promptly to personal representative requests.

Appoint a single compliance officer responsible for responding to inspector notices within the 14-day review window. Maintain a register of all inspector interactions and ensure that any SAET review application is lodged strictly within time.

Where an industry award or enterprise agreement offers superior LSL, consider applying to SAET under s 9 for a formal exemption. The application can be made in anticipation of the award being made. If granted, update payroll systems to apply the substituted scheme and monitor compliance, because breach can trigger revocation and back-payment exposure.

Finally, conduct an annual audit of all workers with more than five years’ service. The audit should reconcile payroll data against the statutory averaging formulas, flag any impending seven- or ten-year anniversaries, and confirm that every required record field is populated. In a corporate group, centralise the LSL register so that related-employer movements are automatically reflected.

Following this disciplined, systems-based approach minimises penalty risk, reduces SAET litigation, and ensures that the organisation treats LSL as a predictable cost of long-service rather than an unwelcome surprise on termination.