How to calculate long service leave
A complete guide to calculating long service leave entitlements in Australia, including state-by-state requirements, pro-rata calculations, and termination payouts. Links to LSL policy templates.
Written by
Georgia Morgan
General information only – not legal advice
This guide provides general information about long service leave in Australia. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
What is long service leave?
Long service leave (LSL) is a period of paid leave granted to employees who have worked for the same employer for an extended period, typically 7-10 years depending on the state or territory.
Unlike annual leave and personal leave which are part of the National Employment Standards, LSL is governed by state and territory legislation. This means entitlements vary depending on where the employee works.
How to calculate LSL in 6 steps
Follow this process to correctly calculate long service leave entitlements.
Identify the applicable legislation
Determine which state or territory LSL law applies to your employee based on where they usually work.
Tips:
- LSL is governed by state/territory legislation, not federal
- The relevant law is usually where the employee primarily works
- Check if an award or enterprise agreement provides better entitlements
- Some industries have portable LSL schemes (construction, cleaning)
Calculate continuous service
Determine the employee's continuous service period, including any breaks that count as service.
Tips:
- Start date is usually the first day of employment
- Paid leave (annual, sick, parental) counts as service
- Unpaid leave usually doesn't count but may not break continuity
- Check state rules for what breaks continuity vs pauses accrual
Determine the entitlement threshold
Check when the employee becomes entitled to LSL in their state or territory.
Tips:
- Most states: 10 years for full entitlement
- VIC and ACT: 7 years for full entitlement
- Pro-rata access available after 5-7 years in most states
- Some awards provide earlier access or additional entitlements
Calculate the LSL entitlement
Apply the state formula to calculate the amount of LSL the employee has accrued.
Tips:
- Standard: 8.67 weeks (2 months) for 10 years service
- NT and SA: 13 weeks for 10 years service
- Additional accrual continues after the threshold
- Part-time: Calculate based on ordinary hours worked
Calculate the payment rate
Determine the pay rate for LSL, which is typically the employee's ordinary pay rate.
Tips:
- Usually paid at the employee's ordinary rate at the time of taking leave
- May include regular overtime or allowances if consistently worked
- Check state legislation for specific inclusions/exclusions
- Commission-based employees may have special calculation rules
Process the leave or payout
Either allow the employee to take leave or calculate a payout on termination.
Tips:
- LSL can usually be taken as full pay, half pay, or double time at half pay
- Pro-rata payouts apply on termination after qualifying period
- Some states require payout even if employee resigns
- Cashing out restrictions vary by state
Track long service leave
RosterElf maintains accurate service records and calculates LSL entitlements based on your state requirements. Built for Australian small businesses.
LSL entitlements by state
Entitlements vary significantly between states and territories.
| State/Territory | Threshold | Entitlement | Pro-rata access | Cash out |
|---|---|---|---|---|
| New South Wales | 10 years | 8.67 weeks (2 months) | After 5 years on termination | Not permitted |
| Victoria | 7 years | 8.67 weeks | After 7 years | Not permitted |
| Queensland | 10 years | 8.67 weeks | After 7 years on termination | By agreement (QIRC approval) |
| South Australia | 10 years | 13 weeks | After 7 years on termination | By agreement |
| Western Australia | 10 years | 8.67 weeks (2 months) | After 7 years on termination | By agreement |
| Tasmania | 10 years | 8.67 weeks | After 7 years on termination | By agreement |
| Northern Territory | 10 years | 13 weeks (3 months) | After 7 years on termination | Not specified |
| ACT | 7 years | 6.07 weeks (approx) | After 5 years on termination | By agreement |
Important: This is a simplified summary. State legislation should always be checked for the complete rules, including service calculation methods, exclusions, and special circumstances.
Calculation examples
See how LSL calculations work in practice.
Full-time employee, 10 years service (NSW)
Calculation: 10 years × 8.67 weeks ÷ 10 = 8.67 weeks
Pay: 8.67 weeks × ordinary weekly rate
Entitled to 8.67 weeks (approximately 2 months) of LSL
Employee resigns after 7 years (NSW)
Calculation: 7 years service → pro-rata after 5 years
Pay: 7 ÷ 10 × 8.67 weeks = 6.07 weeks
Entitled to 6.07 weeks pro-rata payout on termination
Part-time employee, 10 years (VIC)
Calculation: Average weekly hours over service period
Pay: e.g., 20hrs/week average × 8.67 weeks
Entitled to 8.67 weeks at 20 hours per week
Employee with 15 years service (SA)
Calculation: 13 weeks (first 10 years) + 6.5 weeks (5 years × 1.3)
Pay: 19.5 weeks × ordinary weekly rate
Entitled to 19.5 weeks of LSL
Common LSL mistakes
These errors can lead to underpayment claims and compliance issues.
Applying wrong state legislation
Risk: Incorrect entitlements calculated, potential underpayment claims.
Solution: Use the legislation for where the employee primarily works, not where the business is registered.
Forgetting part-time adjustments
Risk: Overpaying or underpaying part-time employees.
Solution: Calculate LSL based on average hours worked over the service period.
Not including all service
Risk: Undercalculating entitlements, employee complaints.
Solution: Include all continuous service including periods of paid leave.
Incorrect termination payouts
Risk: Underpayment claims, Fair Work complaints.
Solution: Check state rules for pro-rata payouts on resignation vs dismissal.
Ignoring award entitlements
Risk: Missing additional entitlements that exceed state minimums.
Solution: Check if the applicable award provides better LSL terms.
Related guides
More resources for payroll and compliance.
Frequently asked questions
- In Victoria and ACT, employees are entitled to LSL after 7 years of continuous service. In all other states and territories, the threshold is 10 years. However, pro-rata entitlements on termination are available earlier (typically after 5-7 years depending on the state).
- Most states provide 8.67 weeks (approximately 2 months) for 10 years of service. South Australia and the Northern Territory are more generous at 13 weeks (3 months) for 10 years. Additional leave accrues after the initial threshold at varying rates depending on the state.
- Yes, part-time employees are entitled to LSL. Their entitlement is calculated based on their ordinary hours of work. If hours have varied over the service period, the entitlement is typically based on the average weekly hours worked.
- Casual employees can be entitled to LSL if they work on a regular and systematic basis. This is assessed based on the pattern of work and expectation of ongoing employment. However, the threshold and calculation can be complex for casuals.
Regulatory sources
This guide is aligned with state and territory long service leave legislation.
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