Long term employees are great for business. Their knowledge and expertise are often a key component of your business’ success. But accumulated leave – especially Long Service Leave entitlements can be a financial and staffing burden. Here’s what you need to know.
Who Is Entitled To Long Service Leave?
In NSW, Long Service Leave applies to most full-time, part-time or casual workers. They are entitled to 2 months’ (or 8.67 weeks) paid leave for 10 years’ service and a further 1 month after each period of 5 years of continuous service. Leave is paid at the ordinary gross weekly wage.
But this is a minimum standard so it’s important to check each long-term employee’s contract. If it states they are entitled to more, then you need to provide it.
Budgeting For It
Unless you are regularly putting money aside and making plans on how to fill the talent gap during the long-term employee’s Long Service Leave, you will struggle. In fact, it’s not unusual for SMEs to flounder under the pressure of financing this entitlement.
So planning is everything!
Many experts recommend you start planning for an employee’s Long Service Leave once they have served 5 years. If you are in this position and do not yet have a plan, talk to us or consult your accountant for advice.
Can An Employee Work For Someone Else While Taking Long Service Leave?
Possibly. It depends on the hours they are working. The Long Service Leave Act 1055 (NSW) prevents an employee from working the same hours with another employer while on Long Service Leave. However, they can work for someone else if it is outside the hours they would normally work for you.
For example, if your employee works Monday – Friday at normal office hours, they could work for someone else in the evenings or on weekends.
Can You Direct An Employee To Take Long Service Leave?
Ideally, the employer and employee should work together to plan when Long Service Leave will be taken. If they cannot agree, an employer can direct an employee to take leave PROVIDING they give the employee 3 months’ notice.
Conversely, if you are fearful of the implications to your business if an employee wants to take their Long Service Leave, you have a problem with your staffing levels. But don’t worry. The End2End team can help you so get in touch by calling 02 8977 4002.
Long Service Leave And Selling The Business
Depending on the longevity of your staff, accrued Long Service Leave can represent a large burden for your business. As a result, potential buyers may be reluctant to purchase your business; they may offer you a substantially lower price or require you to supply the pro rata funding for medium and long-serving employees.
Help To Manage Leave Entitlements
Many businesses struggle to keep their employees and high staff turnover is a real financial burden in terms of hiring, inducting and training staff. But if you have a happy, productive, long-serving staff, you also need to carefully manage your Long Service Leave obligations.
Get the help you need before it becomes a problem. Call the team at End2End Business Solutions on 02 8977 4002.