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A pro-rata long service leave entitlement is when a worker is paid a lump sum in lieu of leave. To be eligible for a pro-rata entitlement leave you must:

  • have completed 7 years continuous service with your employer (but less than 10 years)
  • terminated your employment.

Despite the above, there are provisions to take pro-rata as leave if there is agreement with your employer.

Long service leave entitlements are calculated as the monetary equivalent of 1.3 weeks leave in respect of each completed year of service at the worker’s ordinary weekly rate of pay immediately before the worker’s service was terminated.

The employer must pay the worker the amount to which they are entitled immediately upon termination.

A worker is not entitled to a pro-rata payment if:

  • their employment is terminated on the grounds of serious and wilful misconduct
  • the contract of service is unlawfully terminated by the worker (such as failure to give the required amount of notice).

If a worker terminates their employment, has their employment terminated by their employer or is made genuinely redundant prior to reaching 7 years of service, then they will not have completed the required years of service to become entitled to long service leave. Therefore, the worker will not be entitled to a long service leave payment upon termination.

Pro-rata leave following resignation, termination or redundancy

Resignation

If you resign from your employment after 7 years of continuous service, but less than 10 years, you are entitled to the monetary equivalent of 1.3 weeks leave for each completed year of service.

You should check that you have completed at least 7 years of continuous service before submitting your resignation.

Example

Lien has worked as a casual at Daisy’s Nursery for a little over 9 years. Lien is retiring to look after her grandchild so her daughter can return to work. As she has just passed her 9 year anniversary since starting at the nursery, Lien hands in her resignation to Daisy giving the required notice period.

When Daisy is working out Lien’s termination payment, she notices that due to Lien taking 10 week’s unpaid leave during her 9-year service, Lien will fall two weeks short of 9 years of continuous service.

Therefore, Lien will be entitled to 10.4 weeks long service leave instead of 11.7 weeks that she may be expecting.

Termination & Redundancy

If your employment is terminated or you accept a redundancy after 7 years of continuous service, but less than 10 years, you are entitled to the monetary equivalent of 1.3 weeks leave for each completed year of service.

Termination for misconduct

You are not entitled to a pro-rata payment if your employment is terminated on the grounds of serious and wilful misconduct, or if you unlawfully terminated your employment, such as failure to give the required amount of notice upon termination.

'Serious misconduct' is defined as:

  • wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment, and
  • conduct that causes serious and imminent risk to:
    • the health or safety of a person, or
    • the reputation, viability or profitability of the employer's business.

Examples of serious misconduct include the employee:

  • engages in theft, fraud or assault (in the course of their employment)
  • being intoxicated at work
  • refusing to carry out a lawful and reasonable instruction that is consistent with the employee's contract of employment.

An employee who have had their long service leave entitlements denied due to misconduct but believe that they have been unfairly dismissed should contact the Fair Work Ombudsman or the Fair Work Commission.

Pro-rata leave whilst still in employment

If you wish to access your pro-rata long service leave and you are still employed, you must discuss your options with your employer. Your employer is under no obligations to grant you pro-rata leave or to pay out your entitlement whilst you are still employed and have not reached 10 years' service.

An employer cannot force a worker to take pro-rata leave or to accept a pro-rata payment instead of leave.

If there is mutual agreement between the worker and employer to take or cash out long service leave, this does not affect a worker’s period of continuous service.

Example

Jack has worked with his employer, Sylvia, for 8 years. Jack’s daughter is getting married in the UK and he would like to take 4 week’s holidays to attend the wedding and do some sightseeing. Jack has also asked Sylvia if his remaining entitlement could be paid out so that he has some money to put towards the trip. Sylvia agrees to let Jack use some of his pro-rata long service leave entitlement and to cash out the rest as she would need to pay out his entitlement if Jack chose to resign from his job.

Jack takes his 4 weeks leave and receives a cash lump sum equal to the remaining 6.4 weeks (Jack’s pro-rata entitlement after 8 years is 10.4 weeks – 8 x 1.3 weeks).

Six months later, Jack reaches his anniversary date thereby completing another year of service with Sylvia’s business. Jack now has 1.3 weeks long service leave accrued.

Despite taking his pro-rata entitlement, Jack’s period of service continues as does his long service leave entitlement.


Questions about your long service leave?

If you have read all of the long service leave information on our website and you still have questions or concerns about your entitlements, please complete our long service leave form and we will get back to you.

Page last updated: 22 April 2022