In New Zealand, there is no legal requirement on employers to offer long service leave and benefits. Despite this, many employers choose to offer long service entitlements as a way to recognise and acknowledge long serving employees. The conditions regarding additional long service entitlements can either be negotiated between an employer and employee as part of the collective or individual agreement or form part of the company’s policies.
What is Long Service Leave?
If an employee has been working for the same employer, or group, for a long period of time, they may be entitled to long service leave and other benefits. As employers are not legally required to offer long service leave, the conditions of long service entitlements will always be different.
If an employer chooses to offer long service leave, the employment agreement or company policy should clearly set out:
The length of time an employee must work to qualify for long service entitlements
How much long service leave the employee will receive
Any other additional long service benefits the employee may receive
How is Long Service Leave Payment Calculated?
In most cases, employees receive the ordinary pay rate during their time on long service leave. The ordinary pay rate is the amount an employee receives during normal work hours and does not include:
Overtime or penalties
Shift loadings
Allowances
If an employee’s pay rate is not constant and can change in certain situations, there are one of two ways you can calculate an amount that closely matches their ‘ordinary’ pay rate:
The amount of ordinary payment the employee will receive from the time they take leave
The average weekly amount the employee has earned in the past 52 weeks
For long service leave entitlements, the greater of both amounts is always the one to choose.
Keep in mind, long service leave is considered part of the employee’s leave entitlements so any unused leave must be paid at the end of the employment relationship, in the same way that annual leave is paid out.
Eligibility
The amount of time an employee must work for the same employer, or group, to receive long service leave depends on their employment agreement or the company’s policy. Some employers may offer an extra week of long service leave after every five years of continuous service for example while others may offer additional long service leave and a one-off payment after 10 years of continuous service.
An employee does not have to retain the same position, duties, rate of pay, and responsibilities to be entitled to long service leave. Even if these change, as long as they work for the same employer or group – their service will still be deemed as continuous – they will be entitled to any long service leave based on the agreement or policy.
For advice on how to incorporate leave entitlements into your employment agreement, contact Employsure on 0800 568 012.
