Does It Matter if You Take Long Service Leave (LSL) or Annual Leave Instead?

hahaboy on 04/03/2022 - 11:46

I'm working in Victoria, and have a sizable annual leave and long service leave (LSL) balances available. I'm looking to take up a minimum of six months off starting in this financial year.

Does it matter if I use up LSL or annual leave first? I have the option to do half-pay in both cases, which I'm comfortable to do.

I'm considering taking the half-pay annual leave first then LSL, as i've heard that 'public holidays' are not excluded automatically with LSL and Easter/Anzac is around the corner.

Additionally, half-pay would allow me to have lower taxes for the financial year.

Any other considerations?

Education & Work

Comments

  • GG57 on 04/03/2022 - 11:48
    +8

    Most employers (happy to be corrected) would prefer you use up your Annual Leave before using LSL.

    Do you plan to use all of your LSL? It have more forward value if you can retain it for future use.

    • stratbargain on 04/03/2022 - 12:00
      +6

      I think the difference is legally (I could be wrong) they can force you to use Annual leave balance if it's over a certain amount. They can't force you to use LSL.

      So always use Annual Leave first

      • freefall101 on 04/03/2022 - 16:03

        They can force you to take LSL, however they must give 12 weeks notice first (in Victoria, at least).

  • Adredocto on 04/03/2022 - 11:53
    +6

    Use your annual leave first as this is what employers look at on their balance sheet. Once you are over a certain cap they will encourage (then force) you to take annual leave. It is a big liability for the business carrying leave budgets over each year.

    Check what award/industry you are under for LSL. In federal government LSL is longer period but based on calendar days (i.e. includes public holidays and weekends). Many private industry companies award LSL that functions the same way as annual leave.

    • freefall101 on 04/03/2022 - 16:11

      Long service leave accrues on the balance sheet as well. It's a really annoying balance, actually, because you need to have estimate values up until the point it ticks over into required payment (which varies by state, which is even more annoying).

      But if OP has AL and LSL available to take, both are sitting on the balance sheet already. I doubt they'd really care which one is used. And yeah, in Victoria for private companies LSL is very similar to AL under current laws.

      • hahaboy on 04/03/2022 - 16:47
        +1

        Ok great to know. Our company has never chased us to take leave if we don't want to. I love that aspect about the company.

        In that regards, the balance sheet issue has not been a consideration (+ it's a employer consideration…not as an employee)

        • jrvb42 on 05/03/2022 - 11:53

          This is great as long as your company remains solvent. If they go down the gurgler, so does your leave, of all types. The fact they they aren't worried about that big liability on their balance sheet may indicate financial laxness and/or incompetence, which in itself adds to the risk of them going under if stressed. And these are stressful times for many businesses. Maybe not yours.

          • freefall101 on 05/03/2022 - 19:42

            @jrvb42: This isn't true. If they go down the gurgler they go into liquidation and employees sit before unsecured creditors in the queue. Assets are sold and employees are first in line. I'm sure there's companies out there that are so far in debt they can't even cover employee entitlements but usually they'd be trading insolvent long before that and if they're a big company, they'd be wound up long before then.

            But Australia also has the Fair Entitlements Guarantee. If a company does go broke and there's no way to pay employees the government will pay AL, LSL, wages up to 13 weeks, notice period up to 5 weeks and redundancy. When Clive Palmer pulled a shifty on Queensland Nickel and employees went unpaid, the government stepped in and paid them (until Clive settled on his fight to not pay his employees that he was waging "for the greater good").

    • hahaboy on 04/03/2022 - 16:39

      I see. I'm in private industry, so assume it will be the same approach as annual leave then. Is there a website to check?

      • Chakko on 05/03/2022 - 09:00

        My understanding from various workplaces is that LSL is used up in a more formal way as agreed with your employer (three month block full pay, six month half pay, one day per week over one year etc). Again, from what I've seen in my various workplaces, they can't stop you taking that LSL whenever you want.

        AL is more dependent on your team/manager. Most managers would say no to you going on two week's holiday starting from next week.

  • iamherenow on 04/03/2022 - 12:27

    See if you can use annual either side of lsl.

  • GrueHunter on 04/03/2022 - 12:33
    +6

    It sounds like you're not quite sure how LSL works. It's not just an extra bucket of annual leave you can take a day at a time. Depending on the award or instrument, you'll probably have to take a minimum amount of time in one block - usually seven days. LSL is (usually, not always) measured in calendar days, not work days, so public holidays and weekends eat into your leave.

    Taking LSL over Easter / Anzac would be a waste of time. Use annual instead so you don't lose those three public holidays.

    • Shleepy on 04/03/2022 - 14:11

      On public holidays, perhaps this varies by Award? I was just looking at my own award and it says:

      "
      Subject to the conditions governing annual leave, a staff member may add to the period of absence on long service leave:

      annual leave; and
a public holiday which falls within or adjoins the long service leave period.

      "

      This suggests (to me at least) that one would be paid for the public holidays occurring during LSL.

    • freefall101 on 04/03/2022 - 16:09
      +2

      In Victoria the minimum amount of LSL you can take is a single day, you really can use it like this if you want (unless the award says different).

      Also in Victoria, the rules are that public holidays are not included in LSL and the legislation states it replaces ordinary working hours, so not calendar days.

      I think you're looking at rules for federal employees.

      • hahaboy on 04/03/2022 - 16:40

        So essentially from my end, it doesn't matter if i take my annual leave or LSL first. In both cases, it will be the same outcome over the Easter/Anzac day breaks.

    • peterwilliams83 on 04/03/2022 - 20:21
      +2

      Given the minimum period of LSL is generally 7 calendar days, LSL is often best utilised in a 12 days block giving two weeks off (eg Mon-Fri, Sat, Sun, Mon-Fri). This minimises the number of days 'lost' to weekends (as you'd normally have them off work anyway).

      Keep in mind LSL often can't be taken both sides of other types of leave (eg. LSL - Annual Leave - LSL), but generally can be in the middle of other types of leave (eg A/L - LSL - A/L).

  • RockyRaccoon on 04/03/2022 - 13:22

    Also depends on your working hours. If you take long service leave when your hours are reduced, like going part time before leaving, it can affect the amount of money you get while on leave.

    I cant give you the details as dont know the exact formula/conditions maybe others here can advise. A relative got screwed on this when they transitioned into retirement.

    • hahaboy on 04/03/2022 - 16:41

      Interesting. Can't see my role becoming part-time, but good to know.

  • cupcake on 04/03/2022 - 13:57
    +2

    You need to speak to someone in your Payroll department.
    I don't think it matters if you take Annual Leave before Long Service Leave. You will get paid the same.
    I took a year off and used up all my Annual Leave and then Long Service Leave.
    If I took half pay, I could have taken two years off.
    FYI.

    • macfudd on 04/03/2022 - 21:33

      This is the best answer. Your payroll team knows what your companys leave rules are and what their payroll software will do when you apply for leave in different ways.

      Call them and say 'Hey, I have this much AL & LSL, this is the scenario, what is the best way for me to do this without getting screwed'.

      • cupcake on 05/03/2022 - 18:24

        Thanks. I wanted full pay as I still had a mortgage but certainly the OP should ask about his/her leave entitlements.

  • vince088 on 04/03/2022 - 14:11

    I would use LSL first.

    Annual leave has loading (17.5%) which stacks up over time with your pay rises so getting payed out your AL when you leave or retire at the end is best

    • Caped Baldy on 04/03/2022 - 14:18
      +1

      not everyone has ALL though. May as well take it as unpaid leave which I actually did as a fresh grad to avoid going negative

    • GG57 on 04/03/2022 - 14:21
      +2

      Not everyone gets Leave Loading.
      Taking unpaid leave is counter-productive, as that would not accrue for LSL.

  • thatonethere on 04/03/2022 - 16:59

    Depends where you are - where I am there is a cap on annual leave so you have to keep chipping away and use it. If you get to the cap - you are deemed on leave. Where as you can stash LSL and build up huge amounts.

  • brad1-8tsi on 04/03/2022 - 17:31
    +1

    annual leave first

  • mskeggs on 04/03/2022 - 18:18
    +4

    When I left my last job, my lsl balance was paid out, but did not get any super added. I should have drawn down lsl in preference ahead of leaving.

    • thestig on 05/03/2022 - 07:51
      +3

      Plus you would've accrued more AL and LSL while you were on the leave if you'd used it up before you left.

  • 2esc on 05/03/2022 - 08:44

    Do you have to use up one or the other first? Why not plan to use say 80% of each leave some up your sleeve.

    I like to have some annual and lsl upmy sleeve in case I or a family member has a major illness and I use up all my sick leave never had to yet but I have seen it where a person has ended up in a tough financial situation as they had no leave.

  • OzHunterNSW on 05/03/2022 - 15:24
    -3

    They attract a different rate of tax

  • larndis on 05/03/2022 - 16:49

    Definitely check your award/agreement/leave policy and get advice from HR as there are obviously many different considerations depending on your specific circumstances

  • oz2882 on 05/03/2022 - 18:09
    +2

    I have been taking LSL at half pay for almost two years now and plan to retire when I use up all my LSL six months later. The advantages of doing so are:
    1. I am accruing annual leave entitlement and leave loading while on LSL;
    2. Half pay LSL allows me to stretch my leave twice longer;
    3. My take home pay is more than half of my full time earning because I am now on a lower tax bracket;
    4. I am still an employee so I entitle to sick leave if I fall sick for 5 days or more and all other benefits;
    5. My employer is required to contribute superannuation continuously;
    6. Avoid a huge tax deducted from my LSL lump sum payout.

    This provides me a regular income while transitioning into retirement. If I change my mind I can always go back to work.

    • cupcake on 05/03/2022 - 18:19

      Nice one!
      You have to do what works for you.

Login or Join to leave a comment
Login Join