In December 2021, the Industrial Relations Legislation Amendment Act 2021 (Amendment Act) was passed by the Western Australian Parliament.
For many employers in Western Australia most amendments to the state’s workplace relations system have limited impact, as they are operating primarily in the federal system. However the recent Amendment Act will change the Long Service Leave Act 1958 (WA) (LSL Act), which applies to most employers with employees based in Western Australia.
The changes to long service leave are not extensive, but they may influence how long service leave is addressed by some employers.
Whilst these amendments have not yet commenced, and no date has been set for their commencement, it is to be expected that they will begin sometime this year.
The key amendments are:
- Flexibility in taking long service leave – the amendments provide that long service leave can be taken at double pay or half pay.
- Casual and seasonal employees will be expressly referred to as covered by the LSL Act and changes include the impact of casual and seasonal employment on ‘continuous employment’ and how to pay long service leave entitlements for casual and seasonal employees.
- An adequate benefit provided in lieu of long service leave will need to be equivalent to the ordinary pay the employee would have received for the long service leave entitlements and cannot be paid in advance. Detailed records are also required to be retained when providing an adequate benefit in lieu.
- Continuous employment and what constitutes continuous employment has been clarified with some minor changes.
- Transfer of business has the same definition as ‘transfer of business’ in the Fair Work Act 2009 (FW Act). This should remove some confusion for employers in transfer of business situations.
- Records to be retained will also need to include the employer’s ABN, the date of any transfer of business and the weekly hours worked by each employee.
- Penalties are to be increased for failure to keep records and provide access to records under the LSL Act. Penalties will be a maximum of A$65,000 for a body corporate or A$650,000 for a serious contravention and A$13,000 for an individual or A$130,000 for a serious contravention. A serious contravention is where the person knowingly commits the contravention and it is part of a systematic pattern of conduct.
We discuss some of these changes in detail below.
Casual and seasonal employees
The Amendment Act expressly states that casual and seasonal employees are ‘employees’ to whom LSL Act applies.
In our view, this change is likely to be of limited impact for most employers. Most employers already provide long service leave entitlements to casual employees. A decision of the Western Australian Industrial Magistrates Court in 2020 confirmed casual employees were capable of receiving long service leave under the existing LSL Act..
The amendments have also clarified when employment is continuous for casual and seasonal employees. They allow for employment to be continuous, and have the absences count towards the length of service, where:
- the absence is permitted under the terms of the employment;
- the absence is due to seasonal factors; and
- an absence is such that after the absence the employee, due to the regular and systematic nature of the work, has a reasonable expectation of returning to work for the employer.
Whilst these absences will count towards the length of service for calculating long service leave entitlements, the actual amount to be paid to a casual or seasonal employee will be based on the average hours of work in the period of employment. The amendments also provide that long service leave payments will need to include casual loading.
Adequate benefit in lieu
The LSL Act has always permitted that an adequate benefit in lieu of long service leave be provided. The existing clause on this is not proscriptive and has the potential to allow for a range of benefits to be provided in lieu of long service leave, provided they are ‘adequate’. The amendments impose increased obligations on employers to address this.
In particular, the amendments state that the adequate benefit in lieu cannot be provided before the long service leave entitlement is due. For example, this would prevent an employer from paying a salary or hourly rate which is expressed to include compensation for long service leave entitlements i.e. the employer is paid A$40 an hour and A$2 of that hourly rate is paid in lieu of the employee receiving long service leave entitlements when they become due.
The amendments also provide that the amount paid in lieu must be equivalent to the ordinary pay which would have been due to the employee. It is no longer simply an ‘adequate’ test.
Record keeping requirements for providing an adequate benefit in lieu have also been increased. The records to be kept must show the benefit paid, the amount of long service leave foregone and when the benefit was paid.
The Amendment Act has clarified when absences will not break continuous employment, specifically updating the language used around continuous employment.
The existing LSL Act provides that the entitlement to long service leave only counts towards the long service leave entitlement for 15 days a year when an employee was unwell. One notable amendment is that this will be removed and there will be no restriction on accruing long service leave when an employee is ill or injured or on carer’s leave, provided the employee receives payment for the period. It is unclear from the amendments whether this requires payment by the employer or could apply to payment for illness or injury by a third party, such as an insurer, but we may need to see how case law evolves on this point.
The amendments also provide that continuous employment will include where the employee is terminated on any ground other than slackness of trade and is re-employed within two months. Under the existing LSL Act, this is six months.
Transfer of business
Transfer of business under the existing LSL Act refers to a ‘transmission of business’. This is a different test to under the FW Act, which creates some confusion for employers. The Amendment Act provides for the same definition of ‘transfer of business’ as in the FW Act, which should assist employers in a transfer of business situation.
The amendments also include a requirement for the old employer to transfer long service leave records to the new employer.
Whilst the changes to the LSL Act are not revolutionary, they do have the ability to impact on the way some employers treat long service leave entitlements. Long service leave is already an area that is sometimes overlooked and/or misunderstood. Once the changes become law it will be more important than ever to ensure employers have a clear understanding of their obligations.
 Janine Callan, Department of Mines, Industry, Regulation & Safety v Ubiquitous Holdings Pty Ltd 2020 WAIRC 00250.