The Long Service Leave Act 1955 (the Act) provides full-time, part-time and casual workers (or any combination of these throughout the period of service) in NSW to 2 months (8.6667 weeks) paid long service leave on completion of 10 years of service. Section 4(2)(a3) of the Act defines a month as 4 1/3 weeks (4.3333 recurring).
Once an employee has completed 15 years of service, only completed years of service will count towards long service leave, and the period of service ends at the last completed year.
The Act also provides for a pro-rata entitlement after five years, if the worker:
resigns as a result of illness, incapacity, domestic or other pressing necessity,
is terminated for any reason other than serious and wilful misconduct,
or dies.
The case of Wipro Ltd v NSW [2022] ("Wipro") clarified the approach to calculating long service leave in NSW when a period of service occurs outside of NSW. This case follows the same approach as the approach set out in the Victorian case of Infosys Technologies Ltd v State of Victoria [2021] VSCA 219.
Background
This decision involved Mr Deepak Rawat's entitlement to long service leave in NSW. Mr Rawat was employed by Wipro Limited, an information technology consulting company based in India and registered in Australia as a foreign company. Mr Rawat had been employed for 10 years, 8 months and 22 days. In relation to service, Mr Rawat was stationed and working in India for 5 years, 11 months and 20 days, meaning he only worked 4 years, 9 months and 2 days in NSW.
Mr Rawat was an Indian citizen, he was hired in India and he served the latter part of his employment in NSW pursuant to a Departure Agreement. This arrangement was common within the company.
The relevant Departure Agreement stated that long service leave did not apply as the employee was expected to return to India, and upon his resignation, he received a service-based payment under the Indian Gratuity Act, including for the period he had worked in NSW.
The Outcome
The Court of Appeal held that Mr Rawat's initial period of service in India was a discrete period that lacked a substantial connection with NSW at the relevant time, the employer, Wipro Limited, was not required to pay Mr Rawat long service leave.
Key Points
Where an employee undertakes a part of their service overseas or outside of NSW, it will not count towards their long service leave accrual unless a substantial connection to NSW can be demonstrated.
A variety of factors may be relevant when assessing the substantial connection to NSW, for example, whether the employment began in NSW, whether long service leave was mentioned within any employment agreement or whether the employee was directed to work outside of NSW. The court noted these circumstances are not exhaustive meaning other information may be relevant when assessing whether a substantial connection to NSW exists. This means every case will turn on the unique circumstances relating to the period of work outside of NSW.
Whether or not a person can prove a substantial connection to NSW may be unpredictable. At mediation, parties have the benefit of controlling and deciding the outcome, thereby avoiding the unpredictable nature of Court hearings and decisions.
By Katherine Guilfoyle
Disclaimer: This blog post includes information, not legal advice. Legal information can become outdated. Consider obtaining legal advice tailored to your unique circumstances if you have employment law inquiries. Please reach out if you require a referral to an employment lawyer.
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