Long Service Leave Act 2018

The Act casts a wide net. The definition of "employee" in s 3(1) is deliberately expansive. It includes anyone employed for hire or reward, apprentices, casual and seasonal employees, public sector employees under the Public Administration Act 2004, persons employed under Part 6 of that Act, directors of public entities, persons appointed under Part 3 of the Victoria Police Act 2013, and legacy police reservists. "Employer" is likewise broad, capturing the actual employing entity, related bodies corporate in certain circumstances, new owners after business or asset transfers (s 11), and Governor-in-Council nominated entities for public-sector staff.

Section 5 lists exclusions. The Act does not apply to the extent of inconsistency with long service leave provided under another Victorian statute, or under an employment agreement that the Industrial Division of the Magistrates' Court finds more favourable. Employees covered by the Construction Industry Long Service Leave Act 1997 (portable scheme) and certain teachers and early childhood staff under the Education and Training Reform Act 2006 are carved out. Employers previously exempted under s 65 of the 1992 Act remain exempt.

Because s 11 deems certain related employers, successor employers after business sales, asset transferees, and contractors under labour-hire-style arrangements to be "one employer", the Act affects corporate groups, franchise systems, outsourcing arrangements and business purchasers. Casual and seasonal workers are expressly included provided the engagement meets the continuous-employment tests in s 12(3). Former employees and their personal representatives are protected for payout and record-access purposes (see definitions in ss 23(3), 26(9), 27(5), 28(7) and 37(8)).

On the regulatory side, the Workforce Inspectorate Victoria may appoint authorised officers (s 29), issue identity cards (s 30), and bring or authorise prosecutions (s 40). Officers of bodies corporate face personal liability (s 43). Unions registered under Commonwealth or State law may bring recovery proceedings on behalf of members (s 26(3)).

Employee rights

• Accrual of LSL after 7 years' continuous employment (s 6).
• Payment at ordinary pay (s 15) or, if higher, the averaged rates prescribed in s 15(2).
• Preservation of pre-2006 superior award entitlements (s 47) and protected accrued entitlements (s 49).
• Right to request LSL of at least one day; employer must grant unless reasonable business grounds exist (s 18).
• Right to request double-length leave at half pay (s 22).
• Protection from adverse action for inquiring about, seeking to exercise, or enforcing LSL rights (s 36).
• Payout on termination (s 9) or death (s 10).
• Access to long service leave records (s 37(6)).

Employer duties

• Grant qualifying LSL and pay it in accordance with s 20 (full payment at start or in the same manner as normal pay).
• Pass on pay rises occurring during leave (s 21).
• Keep accurate long service leave records during employment and for 7 years after (s 37(2)-(3)), produce them on request, and not include false or misleading statements (s 37(5)).
• Not contract out of the Act unless the agreement is more favourable (s 23).
• Provide written disclosure 7 days before entering an agreement that modifies or removes statutory entitlements (s 50).
• Refrain from adverse action (s 36) and from permitting work during LSL (s 35(2)).
• Comply with authorised officer notices (s 31) and maintain confidentiality of information obtained (s 33).
• Pay out LSL on termination or death on pain of daily continuing penalties (ss 9(2), 10(1)).

Mutual rights
Both parties may agree to treat certain unpaid absences longer than 52 weeks as counting toward continuity (ss 13(1)(d), 14(a)). The Industrial Division of the Magistrates' Court may resolve disputes about entitlement, quantum, refusal of requests, directions to take leave, ordinary pay rates, and arrears within 6 years (s 24).

Penalties are calibrated. Most record-keeping, payment and adverse-action offences carry 12 penalty units (natural person) or 60 penalty units (body corporate) with daily continuing liability for certain breaches (ss 9(2), 10(1), 20, 21, 36). Section 43 lists 16 provisions for which officers of bodies corporate are accessorially liable if they authorise, permit or are knowingly concerned in the breach. Reverse onus applies to the reason for adverse action (s 36(5)).

Enforcement routes are multiple. Employees or their representatives may recover arrears as a debt in the Industrial Division within 6 years (s 26), with interest possible where the employer had no reasonable defence (s 26(6)-(8)). The Court may order reinstatement, compensation or reimbursement for adverse action (s 27). On conviction the Court may order payment of arrears or compensation in addition to penalty (s 28).

Authorised officers may monitor compliance, require information or documents (s 31), retain them (s 32), and initiate prosecutions. Only the Workforce Inspectorate Victoria, its authorised employees or prescribed persons may prosecute (s 40). Proceedings must be brought in the Industrial Division, which has exclusive jurisdiction over offences (s 25). Self-incrimination is partially abrogated: it is not a reasonable excuse to refuse production of statutorily required records even if incriminating (s 39(2)).

The Act creates continuing offences (e.g. failure to pay after termination continues each day until paid) and extends the limitation period for record-keeping offences to 6 years (s 37(7)).

The Act is expressly subject to more favourable entitlements in employment agreements (s 5(b), s 23(2)) and in pre-2006 awards (Part 4). It yields to inconsistent provisions in other Victorian Acts (s 5(a)) and to the Construction Industry Long Service Leave Act 1997 portable scheme (s 5(e)).

Heavy interaction occurs with the Fair Work Act 2009 (Cth). Definitions of "fair work instrument", "employment agreement" and references to the Fair Work Transition Act import federal instruments. Section 23 prohibits contracting out but preserves more favourable federal or state agreements. The adverse-action provision in s 36 sits alongside the general protections in Part 3-1 of the Fair Work Act; practitioners must advise clients on overlapping reverse-onus tests.

Business-sale and transfer-of-assets rules in s 11 interact with the transfer-of-business provisions in the Fair Work Act and with Victorian and federal transmission-of-business case law. Continuity rules in s 12 must be read with ss 22 and 23 of the Long Service Leave Act 1992 (now repealed but relevant for transitional absences) and with federal award or enterprise-agreement continuity clauses.

Public-sector interaction is governed by the Public Administration Act 2004 and the Victoria Police Act 2013; the Governor-in-Council may nominate the employer for certain classes (definition of "employer" in s 3(1)). WorkCover interplay appears in s 17, which preserves pre-injury hours and rates for employees on suitable duties or weekly payments under the Workplace Injury Rehabilitation and Compensation Act 2013.

The Magistrates' Court Industrial Division exercises jurisdiction conferred by this Act and by the Workplace Relations Act 1996 (Cth) preservation provisions. Supreme Court jurisdiction is ousted for matters that must be heard in the Industrial Division (s 52, varying s 85 of the Constitution Act 1975).

Criminal liability of officers (s 43) is expressed to operate in addition to Subdivision (1) of Division 1 of Part II of the Crimes Act 1958 (accessories) and the accessorial provisions of the Occupational Health and Safety Act 2004 and other statutes.

The statute has been amended four times since 2018.

The Industrial Relations Legislation Amendment Act 2021 (No. 14/2021) was the most substantial. It substituted ss 9(1)-(2) to create an ongoing obligation to pay LSL on termination (s 9(3)), expanded the definition of "Secretary", replaced references to the Secretary with Workforce Inspectorate Victoria (or Wage Inspectorate Victoria) in ss 29-30, 33, 40 and 41, inserted s 23(3) to clarify that deeds of settlement are captured by the no-contracting-out rule, and added transitional provisions in s 58 preserving existing authorisations. These changes responded to enforcement gaps exposed during the COVID-19 period and aligned Victoria with stronger wage-theft and inspector models.

The Education and Training Reform Amendment (Early Childhood Employment Powers) Act 2024 (No. 7/2024) narrowed the s 5(d) exclusion for certain education-sector employees, reflecting policy to bring early-childhood workers under the general LSL scheme from 30 June 2024.

The Wage Theft Amendment Act 2025 (No. 35/2025), commencing 12 December 2025, further substituted "Workforce Inspectorate Victoria" for previous titles, updated authorised-officer appointment and identity-card provisions (ss 29-30), broadened judicial-notice rules (s 41), and adjusted confidentiality and prosecution authorisations. The changes form part of a broader government policy to consolidate labour inspectorate functions, increase penalties and improve cross-agency information sharing.

Each amendment increased the practical burden on employers (record-keeping, disclosure, payout on termination) while strengthening the Inspectorate's investigative and prosecutorial toolkit. The 2021 amendments in particular reflect a move from purely civil recovery to a hybrid regulatory model with criminal sanctions for systemic non-compliance.

Because the statute channels most disputes into the Industrial Division of the Magistrates' Court, reported appellate authority is limited. Nevertheless, several recurring issues have generated controversy.

First, the meaning of "continuous employment" under s 12, especially the 12-week re-engagement rule in s 12(6) and the "regular and systematic" test for casuals in s 12(3)(d). Magistrates have differed on whether short-term COVID-19 stand-downs interrupted continuity; the 2021 amendments and s 12(7)-(8) were partly designed to resolve uncertainty but have themselves been criticised for complexity.

Second, the scope of "reasonable business grounds" in ss 18(2) and 22(2). Employers have argued that customer-service impacts or roster disruption constitute reasonable grounds; unions counter that the grounds listed in s 3(1) are exhaustive. No superior-court authority definitively settles the standard of review the Court must apply under s 24(3) ("all the relevant circumstances, including the needs of the employee and the business needs of the employer").

Third, the interaction between s 36 adverse-action provisions and the Fair Work Act general-protections regime. Because s 36 carries daily continuing penalties and reverse onus, some employers have sought to characterise claims as purely federal matters to engage Federal Circuit and Family Court jurisdiction. The Magistrates' Court has generally asserted jurisdiction where the pleaded contravention is of the Victorian Act.

Fourth, the continuing-penalty provisions in ss 9(2), 10(1), 20 and 36 have been challenged on proportionality grounds in penalty hearings. Courts have treated each day of non-payment as a separate contravention, leading to large aggregate penalties for small businesses.

Finally, the preservation provisions in Parts 4 and 5 have produced disputes about whether a particular pre-2006 award was "binding" or would have been binding had the employer been in the industry at the relevant time. These require historical industrial-instrument research that is burdensome for both parties and the Court.

No constitutional challenges have succeeded; the Act binds the Crown (s 4) and the privative clause in s 52 has been upheld as a valid alteration of Supreme Court jurisdiction.

Most practitioners miss several subtle traps.

1. Section 9(3) creates a continuing obligation that survives termination; the daily penalty runs until full payment even if the employee has obtained new employment. Many settlement deeds fail to address accrued daily penalties.

2. The "one employer" rules in s 11(9)-(11) capture labour-hire triangular arrangements even where the client never directly employed the worker. A labour-hire provider that ceases trading can leave the host company liable for LSL accrued over many years.

3. Casual employees can accrue LSL despite gaps longer than 12 weeks if the absence is "due to the terms of engagement" or caused by "seasonal factors" (s 12(3)). The "regular and systematic" test in s 12(3)(d) is not limited by the 6-month or 12-month casual-conversion thresholds in the Fair Work Act.

4. The half-pay double-length option (s 22) must be granted unless reasonable business grounds exist. Many enterprise agreements are silent on this, leaving the statutory obligation intact.

5. Section 37(7) gives a 6-year limitation for record-keeping offences, meaning historical failures discovered in 2025 can be prosecuted back to 2019. Authorised officers routinely use s 31 notices to obtain 7-year records, exposing systemic under-recording.

6. The s 50 disclosure obligation applies to any "employment agreement" (including oral variations and deeds). A side letter that reduces LSL accrual without the 7-day written notice can render the modification void.

7. Transitional s 57(1) can produce different continuity outcomes for the same absence depending on whether it began before or after 1 November 2018. Calculating LSL for long-serving employees often requires parallel 1992 Act and 2018 Act runs.

8. Accessorial liability under s 43 extends to "any person concerned in, or taking part in, the management" (not just directors). HR managers and external payroll providers have been prosecuted.

9. The "ordinary pay" definition in s 15(1) includes the cash value of board and lodging. Failure to include non-cash benefits has led to underpayments that crystallise on termination.

10. The Act applies to directors of public entities (s 3(1)(d)). Many part-time statutory board members are unaware they accrue LSL.

Compliance begins with an accurate LSL register that records, for every employee, commencement date, all recognised absences, ordinary hours, ordinary rate, and running accrual. The register must be capable of instantaneous production to an authorised officer (s 37(4)).

Employers should adopt a written LSL policy that sets out the request procedure, the information required, the timeframe for response, and the criteria the business will use to assess "reasonable business grounds". Training for managers on the adverse-action prohibitions is essential; any decision to refuse leave or discipline an employee who has recently requested LSL should be documented with non-LSL reasons.

Payroll systems must be configured to apply ss 15-17 correctly, including the three alternative averaging periods for ordinary time rate and the three alternative periods for normal weekly hours. Where an employee moves to suitable duties or receives WorkCover payments, the system should lock the higher of pre-injury or current hours and rate.

On business sales or outsourcing, due-diligence checklists must include LSL liability calculated on the s 11 "one employer" basis. Sale contracts should contain clear apportionment and indemnity clauses.

For agreements that vary LSL, the 7-day written disclosure under s 50 must be retained. If the agreement is more favourable overall, obtain a Magistrates' Court declaration under s 23(2) or s 5(b) to protect against later challenge.

Employers should maintain a relationship with the Workforce Inspectorate Victoria, respond promptly to s 31 notices, and never produce documents known to be false or misleading (s 38(2)). Record-keeping must continue for 7 years post-employment; destruction policies must be diarised.

Finally, because the Act interacts with federal instruments, organisations covered by modern awards or enterprise agreements should maintain a "LSL hierarchy" document that identifies, for each classification, whether the federal instrument, this Act, or a preserved pre-2006 award supplies the most favourable outcome in respect of qualifying period, quantum, payment on termination, and half-pay option. This document should be reviewed annually or after any award variation.

Organisations that implement these steps, keep accurate registers, train decision-makers, and treat LSL as a non-waivable statutory debt rather than a discretionary benefit will minimise both civil recovery actions and the risk of prosecution by the Workforce Inspectorate Victoria.