Long service leave in Australia: What employers need to know

Published Friday 10 July 2026

Table of contents

• What is long service leave?
• Who's entitled and when does it accrue?
• Long service leave when employment ends
• How much long service leave do you get by state?
• How to calculate long service leave pay
• How to manage long service leave in your payroll system
• Employer obligations and records
• Simplify long service leave with Xero
• FAQs on long service leave

Key takeaways

• Long service leave entitlements and rules vary significantly across Australian states and territories, so you must understand the specific requirements that apply to your business location.
• Continuous service is the foundation of long service leave eligibility, and most absences such as paid leave and parental leave count toward this service period.
• Pro rata long service leave may apply when employees leave before reaching the full qualifying period, depending on their years of service and the reason for termination.
• Calculating long service leave pay requires accurate records of hours worked, pay rates, and service history, particularly for part-time, casual, and variable-hour employees.

What is long service leave?

Long service leave (LSL) is paid leave you provide to employees who have worked with your business for a long period, typically seven to 10 years depending on your state or territory. Unlike annual leave, which accrues every year, long service leave recognises and rewards employee loyalty over the long term.

Long service leave in Australia is governed by state and territory legislation, not federal law. That means the rules differ depending on where your business operates. Each jurisdiction sets its own thresholds for when leave accrues, how much leave employees receive, and when they can access it.

For small business owners, understanding long service leave is essential. It affects your payroll budgeting, your workforce planning, and your compliance obligations. Setting long service leave up correctly helps you avoid underpayments, disputes, and penalties.

The good news? Once you understand the basics and set up the right systems, managing long service leave becomes straightforward.

Who’s entitled and when does it accrue?

Most employees are entitled to long service leave once they meet the qualifying period set by their state or territory. This includes full-time, part-time, and in some cases, casual employees.

The key concept is continuous service. This means unbroken employment with your business. In most states, certain absences, such as paid annual leave, sick leave, parental leave, and workers' compensation leave, count toward continuous service. Unpaid leave may also count in some circumstances, so check your state's rules.

Pro rata long service leave is another important concept. In some states, if an employee leaves before reaching the full qualifying period, they may still be entitled to a pro rata payment. This typically applies when an employee has worked for a minimum number of years but hasn't yet reached the full entitlement threshold. It may also apply if employment ends due to redundancy, illness, or other specified reasons.

For employees who reach significant milestones, such as 15 years of service, additional leave may accrue. The rate of accrual often increases after the initial qualifying period, so it's important to track service years accurately.

Here's what you need to check for each employee:

• Have they worked continuously for the qualifying period in your state?
• Do any absences count toward continuous service?
• Are they eligible for pro rata leave if they resign or are terminated?
• Have they reached a milestone that triggers additional accrual?

Keeping accurate employment records from day one makes these calculations much easier.

Long service leave when employment ends

What happens to long service leave when an employee leaves depends on why they're leaving and how long they've worked for you. The rules vary by state, but the key factors are always the same: years of service, reason for termination, and whether the employee has reached the pro rata threshold.

Resignation

If an employee resigns after reaching the pro rata threshold, they may be entitled to a pro rata long service leave payment. If they resign before that threshold, they generally forfeit their entitlement. Check your state's specific rules, as the threshold and conditions vary.

Redundancy, illness, and death

In many states, redundancy, serious illness, or death can trigger a pro rata entitlement. These circumstances are treated differently from a standard resignation because the employee has limited or no choice in ending the employment.

Serious misconduct

Some states exclude pro rata entitlement when employment ends due to serious misconduct. The definition of serious misconduct varies by state, so check your state regulator's guidance before withholding any payment.

Payout on termination

You must pay out any unused long service leave when employment ends, as long as the employee has reached the relevant qualifying threshold. The payment is calculated at the employee's ordinary rate of pay at the time of termination. Use your state's long service leave calculation rules to work out the final payment amount.

How much long service leave do you get by state?

Long service leave entitlement in Australia varies significantly across states and territories. Below is an at-a-glance guide to help you understand the differences. Always check with your state regulator or use a long service leave calculator for precise calculations.

New South Wales

Regarding long service leave in NSW, employees are entitled to two months' leave (8.6667 weeks) after 10 years of continuous service. Pro rata entitlement applies after five years if employment ends due to illness, incapacity, or other prescribed circumstances.

After 10 years, employees accrue leave at a rate of approximately 0.8667 weeks per year. NSW Industrial Relations provides a calculator and detailed guidance on their website.

Victoria

Victoria's entitlement accrues at a rate of one week for every 60 weeks of continuous service (approximately 0.8667 weeks per year). Employees are entitled to take their accrued long service leave after seven years of continuous service, which equates to approximately 6.07 weeks at that point. Pro rata leave is available after seven years, regardless of the reason for termination.

For employees with changing hours, Victoria uses an averaging method to calculate entitlements. This ensures part-time and casual employees receive fair treatment.

Queensland

Regulations for long service leave in QLD dictate that employees are entitled to 8.6667 weeks after 10 years. Pro rata leave applies after seven years, provided employment ends for reasons other than serious misconduct.

Queensland's legislation also covers how to treat interstate service if an employee transfers between states within the same business group. Check the Queensland Government's Business and Industry Portal for full details.

Western Australia

WA employees receive 8.6667 weeks after 10 years. Pro rata entitlement applies after seven years if the employee resigns, or earlier if employment ends due to redundancy, illness, or death.

WA has specific rules for calculating entitlements when an employee's hours or pay rate change. Employers must keep detailed records to support these calculations.

South Australia

South Australia provides 13 weeks after 10 years of continuous service. Pro rata leave applies after seven years, regardless of how employment ends.

SA legislation includes provisions for employees who move between related companies, so service can sometimes be aggregated across employers within a corporate group.

Tasmania

Tasmania entitles employees to 8.6667 weeks after 10 years. Pro rata leave is available after seven years if employment ends for reasons other than serious misconduct.

For employees with variable or irregular hours, Tasmania uses an averaging method similar to Victoria to calculate the payment amount.

Australian Capital Territory

The ACT provides 6.0667 weeks after seven years of continuous service. Pro rata leave applies after five years, where employment ends due to illness, incapacity, or domestic or other pressing necessities.

The ACT has detailed guidance on how to calculate entitlements for employees whose work patterns change over time, including transitions between full-time and part-time work.

Northern Territory

In the NT, employees receive 13 weeks after 10 years. Pro rata entitlement applies after seven years, provided employment doesn't end due to serious misconduct.

The NT also has specific recordkeeping requirements, so ensure you maintain accurate service records from the start of employment.

How to calculate long service leave pay

Calculating long service leave pay involves several key inputs: the employee's length of service, their ordinary rate of pay, and any averaging rules for variable hours. The calculation differs depending on whether the employee is taking leave while still employed or receiving a payout on termination.

To calculate long service leave pay, follow these steps:

1. Confirm the employee's total period of continuous service under your state or territory rules.
2. Identify whether the employee is full-time, part-time, or casual, and whether their hours or pay rate have changed.
3. Work out the employee's ordinary rate of pay or the required average rate under your state rules.
4. Calculate the total weeks of long service leave the employee has accrued based on their service.
5. Multiply the accrued weeks of leave by the weekly pay amount to get the gross long service leave payment.
6. Apply tax, superannuation, and any other required deductions according to whether the leave is taken or paid on termination.

Full-time and part-time employees

For full-time and part-time employees with consistent hours, calculate long service leave pay at their ordinary rate of pay as defined by your state's legislation. This typically includes their base salary or hourly rate, but excludes overtime, bonuses, and allowances unless specified otherwise.

If an employee's pay rate has changed during their service, some states require you to use an average over a defined period. Check your state's rules to ensure accuracy.

Casual and variable hours

For casual employees and those with variable hours, use an average of their hours worked over a defined look-back period. This period varies by state but is often the last five years or the entire period of service.

To calculate the average, review timesheets and payroll records to determine the employee's typical weekly hours. Multiply this average by their current hourly rate to arrive at the weekly pay amount, then apply it to the leave period.

Reliable timesheet data is essential here. If your records are incomplete, you may need to reconstruct hours from other sources such as rosters or bank deposits.

Pro rata on termination

Pro rata long service leave applies when an employee leaves before completing the full qualifying period but has worked for the minimum period set by your state.

To calculate pro rata leave, determine how much leave the employee has accrued based on their years of service. For example, if your state provides 8.6667 weeks after 10 years, an employee who has worked eight years would be entitled to approximately 6.93 weeks (8/10 × 8.6667).

Check whether your state allows pro rata payments only in certain termination scenarios, such as redundancy or resignation, and exclude cases of serious misconduct where relevant.

Portable long service leave

Some industries operate under portable long service leave schemes. These schemes allow employees to carry their entitlements across multiple employers within the same industry, rather than losing accrued leave when they change jobs.

Portable long service leave currently applies to industries such as construction, contract cleaning, and community services in some states. If your business operates in one of these industries, you must register with the relevant portable long service leave fund and make regular contributions based on your employees' wages.

Employees claim their leave directly from the fund, not from you. However, you're still responsible for accurate reporting and timely payments to the fund. Check your state regulator's website to confirm whether portable long service leave applies to your industry.

Do you pay super on long service leave?

This depends on when and how the leave is paid. If an employee takes long service leave while still employed, superannuation is generally payable on the leave payments. This is because the leave is considered ordinary time earnings under superannuation guarantee rules.

However, if long service leave is paid out on termination as part of an employment termination payment, superannuation may not be payable. The rules can vary depending on awards, enterprise agreements, and specific circumstances, so consult your accountant or the Australian Taxation Office (ATO) for guidance.

How to manage long service leave in your payroll system

Managing long service leave efficiently requires a clear workflow: setting up categories, capturing approvals, processing payments accurately, and forecasting liabilities. A well-organised payroll system saves time and reduces compliance risk.

1. Set up a long service leave category

Create a dedicated leave category in your payroll software specifically for long service leave. This keeps LSL separate from annual leave, sick leave, and other entitlements.

When setting up the category, configure the pay items to reflect the correct pay rate. Enter any starting balances for employees who have already accrued leave before you implemented the system.

If your payroll software integrates with your accounting system, ensure the long service leave liability account is correctly mapped so accruals and payments post to the right place in your ledger.

2. Track and approve leave requests

Enable employees to submit long service leave requests through your payroll or HR system. When a request comes in, check the employee's accrued balance against the amount they're requesting.

Consider your business needs before approving leave. While employees have a legal entitlement to take long service leave, you can negotiate timing to minimise disruption. Record all approvals in writing and store them in the employee's file. This creates an audit trail and protects both you and the employee.

3. Pay long service leave in a pay run

When processing a pay run that includes long service leave, add the approved leave to the employee's pay. Apply the correct rate based on your state's rules – this might be their current rate, an averaged rate, or a pro rata calculation if they're leaving.

Your payroll software should automatically calculate superannuation, pay as you go (PAYG) withholding, and any other deductions. Double-check these calculations, especially for complex cases involving variable hours or pro rata payments.

Once the pay run is finalised, the payment posts to your accounting system, reducing the long service leave liability and recording the expense.

4. Report and forecast leave liability

Run regular leave balance reports to see how much long service leave each employee has accrued. Filter by team or department to understand where your liabilities sit.

Export these reports for cash flow planning and budgeting. Long service leave liabilities can be significant, especially if you have long-tenured employees. Forecasting helps you set aside funds so you're not caught off guard when an employee takes leave or resigns.

Review your leave liability at least quarterly, and adjust your forecasts as employees reach new milestones or leave the business.

5. Keep records and get expert support

Store all leave approvals, calculations, and payment records in a secure, audit-ready format. Most payroll systems retain this data automatically, but it's good practice to back up key documents separately.

If you're unsure about a calculation or a complex scenario – such as an employee with multiple periods of unpaid leave, or someone transferring between related companies – engage your accountant or bookkeeper. They can review your records, confirm your calculations, and ensure you're meeting all compliance obligations. If you’re in the process of hiring employees, getting professional guidance can help to ensure you stay compliant.

Employer obligations and records

Beyond calculating and paying long service leave, you have broader obligations around policy, transfers of business, and recordkeeping. Meeting these obligations protects your business and supports your employees.

Policy, notice, and reasonable refusal

Develop a clear long service leave policy and include it in your employee handbook or onboarding materials. Your policy should explain how leave accrues, when employees can access it, how much notice they need to give, and how you'll handle requests.

Most states require employees to give reasonable notice before taking long service leave – often several weeks or months, depending on the length of leave requested. In return, you must respond to requests promptly and in good faith.

You can refuse or reschedule a long service leave request on reasonable business grounds, such as peak trading periods or staffing shortages. However, you must provide written reasons and work with the employee to agree on an alternative date. Unreasonable refusal can lead to disputes or legal action.

Transfers and business sales

If you sell your business or restructure, long service leave entitlements usually transfer to the new owner. This is particularly important in a business sale, as the buyer inherits the liability for accrued leave.

When negotiating a sale, clearly document how long service leave liabilities will be handled. Typically, the purchase price is adjusted to reflect the leave liability, or the seller pays out accrued leave before settlement.

Employees' continuous service continues under the new employer, so their entitlements remain intact. Make sure this is reflected in employment contracts and sale agreements to keep your payroll compliant

Recordkeeping checklist

You must keep accurate records of each employee's service, leave accruals, and payments. These records must be retained for the period specified by your state – often seven years after the employee leaves.

Your recordkeeping checklist should include:

• start date and any breaks in service
• hours worked (especially for part-time and casual employees)
• leave balances and accruals
• leave requests and approvals
• payment calculations and pay slips
• correspondence about leave (requests, refusals, negotiations)
• records of any portable long service leave fund contributions

Store these records securely, whether digitally or in hard copy, and ensure they're easily accessible if requested by the employee, their representative, or a regulator during an audit.

Simplify long service leave with Xero

Managing long service leave doesn't have to be complicated. Xero helps you automate accruals, calculate complex cases, and forecast leave liabilities so you can plan with confidence.

With Xero, you can set up dedicated leave categories, track balances in real time, and process payments accurately, whether you're handling full-time employees, casual workers, or pro rata terminations. Your leave data integrates with your accounting, so liabilities and expenses post to the right accounts. Because Xero is cloud-based, you and your accountant or bookkeeper can work on payroll from anywhere.

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FAQs on long service leave

Below are quick, employer-focused answers to common questions about managing long service leave in Australia.

How many weeks do you get after 10 years of service?

The amount of long service leave your employee gets after 10 years depends on your state or territory, and ranges from about 6 to 13 weeks. Use your state regulator's long service leave calculator or visit its website to confirm the exact entitlement for each employee.

What is the difference between long service leave and annual leave?

Annual leave accrues every year and is designed to provide regular rest breaks. Long service leave accrues only after a long period of continuous service and rewards employee loyalty. Annual leave is governed by the Fair Work Act, while long service leave is governed by state and territory legislation.

Can you cash out long service leave?

In some states, you can agree with an employee to cash out part of their long service leave while they are still employed, if the law in your state allows it. However, cashing out is not permitted in all states, and where it is allowed, there are often restrictions on how much can be cashed out. Check your state's legislation before agreeing to any cash-out arrangement.

Does an employee lose their long service leave if they resign?

Not necessarily. Employees who resign after reaching the relevant pro rata threshold may be entitled to a pro rata payment, but those who resign before that threshold generally forfeit their entitlement. Check your state's rules to confirm the exact conditions.