Say farewell to long service leave


If you have ever taken long service leave, you might be a rare creature in today’s workforce.

The Australian Human Resources Institute (AHRI) surveyed HR practitioners to gauge interest and uptake of long service leave. The results perfectly encapsulate the changing world of work: shorter tenures in jobs and more job hopping is making long service leave irrelevant. The report is part of a submission by AHRI to the Victorian government’s review of long-service leave. Industrial Relations Minister, Natalie Hutchins, announced the review in February to determine if the current arrangements meet the needs and expectations of workers, as well as looking at ways to simplify and streamline the process.

The original rationale of long service leave was to reward employees for committing more than 10 years to a single employer. It was also meant to cater for the large numbers of immigrants from the UK, allowing them to visit relatives back home. These reasons have “no substantive contemporary relevance in their present form for the vast majority of Australian workers,” says AHRI National President, Peter Wilson AM (FCPHR).

More than 60 per cent of respondents report the average employee stays eight years with a company, with only 21 per cent saying average length of employment hits 10 years or more. When you split this by sector, 42 per cent of public sector employees reach 10 years. This drops to a mere 15 per cent for the private sector and 12 per cent for not-for-profits.

Many realities of today’s workplaces contribute to low uptake of long service leave. Instability, restructuring and downsizing remove employee control over eligibility. This ties in with globalisation and industry disruption amid ever-increasing competition for talent. Employees are now choosing to switch jobs to secure better pay and conditions, and to broaden their experience in order to stay afloat.

Ignorance isn’t an issue, either. According to respondents, 83 per cent of HR practitioners think employees are aware of long service leave entitlements and 66 per cent said they highly valued it. However, only 45 per cent expect to actually qualify for long service leave at some point in their careers. This number looks optimistic when compared with uptake figures: fewer than 20 per cent of employees within their organisations took long-service leave in the past five years.

A majority of respondents agreed that it is important to reward employees for tenure, but opinions split when it came to rewarding service over other factors such as performance:

“It is important to reward tenure but not as important as rewarding performance,” says one respondent. “We do it because we have a legal obligation to; however, we would much prefer to recognise contribution and productivity rather than longevity,” says another.

Some HR professionals, particularly those in the public sector and not-for-profits, considered long service leave as an important part of their rewards arsenal, especially for sectors that might be working with scant resources.

“The public sector has very limited options to reward employees; long service leave is one way we can reward all staff for their service,” says one respondent. “People like to be rewarded, and sticking at a job for 10 years requires people to be committed, determined and willing to ride the highs and lows,” says another.

Flexible work arrangements factor into long-service leave as well. Most respondents said they have some sort of flexible work arrangements, including hours of work (83 per cent), extended parental leave (59 per cent), ability to work off-site (58 per cent) and ability to purchase annual leave (46 per cent). Only 29 per cent reported flexibility around sabbaticals or career breaks.

Issues around flexibility in terms of the Fair Work Act were also raised. Survey respondents were asked if the Fair Work Act provides enough opportunities for taking a career break, and answers fell into roughly three equal groups: 34 per cent said ‘yes’, 30 per cent said ‘no’ and 36 per cent were undecided. Interestingly, there was pushback on whether the government should have a say at all.

“One thing that came out in the comments to the answers on this question was that many respondents did not want career breaks legislated,” Wilson says.

A majority showed no desire to scrap long-service leave, with only 10 per cent saying they wanted to see it done and dusted. However, many said they would like to see it replaced or balanced with other rewards. Rather than award tenured employees with long service leave, the submission recommends that premiums be redirected towards take-home pay, superannuation, increased recreational leave or a mix of all three.

“My recommendation from these findings is that the Long Service Leave Act be abandoned in its current form, but that the financial benefit not be taken from workers as a result,” Wilson says. “The proposed scheme would direct the value of long service leave into where it’s most needed by workers today – their take-home pay to meet current cost of living, or into their superannuation funds to better provide for their retirement.”

What do you think? Let us know in the comments.

You can read more AHRI reviews and submissions by clicking here

Leave a reply

5 Comments On "Say farewell to long service leave"

avatar
  Subscribe to receive comments  
Notify me of
Mark Wiggins

Like a lot of employment structures implemented decades ago, I believe they hold minimal relevance, when viewed as a part of the current employment landscape.
If you have a good worker, who performs well, meets all expectations and often goes beyond, then you will give them benefits/bonuses/something extra in ongoing recognition, which can often exceed what they will get via LSL.

Sharlene
In the last 3 companies I worked I never saw anyone who was entitled to LSL take this leave even when, in the case of one company, there would have been a good 70% of staff who qualified and a large number of those were 15+ years. They saw it not as a leave incentive, but as a “golden handshake” retirement payout and, as I understand it, this is common in the industry. If it’s not being used as intended, then it should definitely be made to something that will be used, and I completely agree that the best option… Read more »
Lenore Lambert
There are two sides to this: the employer rewarding continued valued service; and the employee’s ability to take a regenerative break. The recommendations above fail to meet either of these goals. From the employee’s side, if LSL is to be transformed into something else, that something else should also be some form of regenerative break. From the employer’s side, it should be something that is awarded for long term contribution. Now perhaps what is a ‘long term contribution’ is different now; perhaps it’s 5 or 6 years, not 10. But to simply cash out the scheme (no regenerative benefit) regardless… Read more »
Bob Kellow

Looks like a de facto 1.7% pay increase to me, whilst those employees who do provide a long term commitment loose their current benefits to a well earned paid break. Furthermore there is no way this would be cost neutral as has been stated.

The Long Service Leave Act (NSW) states quite plainly that the leave should be taken as soon as is practicable. If this was to be encouraged (dare I say enforced) then it would serve its intended purpose.

Anthony Ivers
I am now in a position to take long service ( and I intend to take it travelling the world), as I have for the first time qualified for it. I believe this leave type should be part of every employer’s pitch to a prospective employee ( it was a factor in my accepting my current role). Given the amount of leave types that are available for just about anyone for anything , this leave type is the only one where loyalty and continuing dedication to the business is recognised. If employers marketed it better, it could actually be a… Read more »
More on HRM

Say farewell to long service leave


If you have ever taken long service leave, you might be a rare creature in today’s workforce.

The Australian Human Resources Institute (AHRI) surveyed HR practitioners to gauge interest and uptake of long service leave. The results perfectly encapsulate the changing world of work: shorter tenures in jobs and more job hopping is making long service leave irrelevant. The report is part of a submission by AHRI to the Victorian government’s review of long-service leave. Industrial Relations Minister, Natalie Hutchins, announced the review in February to determine if the current arrangements meet the needs and expectations of workers, as well as looking at ways to simplify and streamline the process.

The original rationale of long service leave was to reward employees for committing more than 10 years to a single employer. It was also meant to cater for the large numbers of immigrants from the UK, allowing them to visit relatives back home. These reasons have “no substantive contemporary relevance in their present form for the vast majority of Australian workers,” says AHRI National President, Peter Wilson AM (FCPHR).

More than 60 per cent of respondents report the average employee stays eight years with a company, with only 21 per cent saying average length of employment hits 10 years or more. When you split this by sector, 42 per cent of public sector employees reach 10 years. This drops to a mere 15 per cent for the private sector and 12 per cent for not-for-profits.

Many realities of today’s workplaces contribute to low uptake of long service leave. Instability, restructuring and downsizing remove employee control over eligibility. This ties in with globalisation and industry disruption amid ever-increasing competition for talent. Employees are now choosing to switch jobs to secure better pay and conditions, and to broaden their experience in order to stay afloat.

Ignorance isn’t an issue, either. According to respondents, 83 per cent of HR practitioners think employees are aware of long service leave entitlements and 66 per cent said they highly valued it. However, only 45 per cent expect to actually qualify for long service leave at some point in their careers. This number looks optimistic when compared with uptake figures: fewer than 20 per cent of employees within their organisations took long-service leave in the past five years.

A majority of respondents agreed that it is important to reward employees for tenure, but opinions split when it came to rewarding service over other factors such as performance:

“It is important to reward tenure but not as important as rewarding performance,” says one respondent. “We do it because we have a legal obligation to; however, we would much prefer to recognise contribution and productivity rather than longevity,” says another.

Some HR professionals, particularly those in the public sector and not-for-profits, considered long service leave as an important part of their rewards arsenal, especially for sectors that might be working with scant resources.

“The public sector has very limited options to reward employees; long service leave is one way we can reward all staff for their service,” says one respondent. “People like to be rewarded, and sticking at a job for 10 years requires people to be committed, determined and willing to ride the highs and lows,” says another.

Flexible work arrangements factor into long-service leave as well. Most respondents said they have some sort of flexible work arrangements, including hours of work (83 per cent), extended parental leave (59 per cent), ability to work off-site (58 per cent) and ability to purchase annual leave (46 per cent). Only 29 per cent reported flexibility around sabbaticals or career breaks.

Issues around flexibility in terms of the Fair Work Act were also raised. Survey respondents were asked if the Fair Work Act provides enough opportunities for taking a career break, and answers fell into roughly three equal groups: 34 per cent said ‘yes’, 30 per cent said ‘no’ and 36 per cent were undecided. Interestingly, there was pushback on whether the government should have a say at all.

“One thing that came out in the comments to the answers on this question was that many respondents did not want career breaks legislated,” Wilson says.

A majority showed no desire to scrap long-service leave, with only 10 per cent saying they wanted to see it done and dusted. However, many said they would like to see it replaced or balanced with other rewards. Rather than award tenured employees with long service leave, the submission recommends that premiums be redirected towards take-home pay, superannuation, increased recreational leave or a mix of all three.

“My recommendation from these findings is that the Long Service Leave Act be abandoned in its current form, but that the financial benefit not be taken from workers as a result,” Wilson says. “The proposed scheme would direct the value of long service leave into where it’s most needed by workers today – their take-home pay to meet current cost of living, or into their superannuation funds to better provide for their retirement.”

What do you think? Let us know in the comments.

You can read more AHRI reviews and submissions by clicking here

Leave a reply

5 Comments On "Say farewell to long service leave"

avatar
  Subscribe to receive comments  
Notify me of
Mark Wiggins

Like a lot of employment structures implemented decades ago, I believe they hold minimal relevance, when viewed as a part of the current employment landscape.
If you have a good worker, who performs well, meets all expectations and often goes beyond, then you will give them benefits/bonuses/something extra in ongoing recognition, which can often exceed what they will get via LSL.

Sharlene
In the last 3 companies I worked I never saw anyone who was entitled to LSL take this leave even when, in the case of one company, there would have been a good 70% of staff who qualified and a large number of those were 15+ years. They saw it not as a leave incentive, but as a “golden handshake” retirement payout and, as I understand it, this is common in the industry. If it’s not being used as intended, then it should definitely be made to something that will be used, and I completely agree that the best option… Read more »
Lenore Lambert
There are two sides to this: the employer rewarding continued valued service; and the employee’s ability to take a regenerative break. The recommendations above fail to meet either of these goals. From the employee’s side, if LSL is to be transformed into something else, that something else should also be some form of regenerative break. From the employer’s side, it should be something that is awarded for long term contribution. Now perhaps what is a ‘long term contribution’ is different now; perhaps it’s 5 or 6 years, not 10. But to simply cash out the scheme (no regenerative benefit) regardless… Read more »
Bob Kellow

Looks like a de facto 1.7% pay increase to me, whilst those employees who do provide a long term commitment loose their current benefits to a well earned paid break. Furthermore there is no way this would be cost neutral as has been stated.

The Long Service Leave Act (NSW) states quite plainly that the leave should be taken as soon as is practicable. If this was to be encouraged (dare I say enforced) then it would serve its intended purpose.

Anthony Ivers
I am now in a position to take long service ( and I intend to take it travelling the world), as I have for the first time qualified for it. I believe this leave type should be part of every employer’s pitch to a prospective employee ( it was a factor in my accepting my current role). Given the amount of leave types that are available for just about anyone for anything , this leave type is the only one where loyalty and continuing dedication to the business is recognised. If employers marketed it better, it could actually be a… Read more »
More on HRM