REEFWA Long Service Leave Position Statement

Overview

On 20 June 2022, amendments to the Long Service Leave Act 1958 (WA) (LSL Act) commenced operation.

Of importance to REEFWA members the amendments to the LSL Act involved:

  • The payment in lieu of taking Long Service Leave cannot be provided before the entitlement to Long Service Leave accrues; and
  • The payment of Long Service Leave is the average weekly rate of pay in the previous 365 days (excluding any period of unpaid leave and stand down).

Previous LSL Act

Prior to the amendments to the LSL Act, arrangements had been in place between Real Estate employers and employees employed as commission only employees, whereby the employee agreed to forego any or all entitlements to long service leave for an equivalent benefit in lieu.  The equivalent benefit was provided through the terms of a written contract in which the employer and employee agreed that a certain percentage of the employee’s commission would be deducted for the purposes of foregoing the long service leave entitlements.

The amendments to the LSL Act have made it clear that these arrangements are no longer permissible.

Impact of Amended LSL Act on REEFWA Members

The difficulty for REEFWA members concerned whether the payment of equivalent benefits in lieu of forgoing long service leave entitlements under the pre-amended arrangements are to be taken into account in determining an employee’s entitlement to long service leave following the amendments on 20 June 2022 to the LSL Act.

REEFWA Position

After extensive discussions, REEFWA’s position has found that the pre-amended arrangements are to be taken into account in determining an employee’s entitlements to long service leave with effects from 20 June 2022.  The period of previous continuous employment which was the subject of payment in lieu of the entitlements under those arrangements should not be counted again.

Of note is that any contracts of employment made before 20 June 2022, will have no effect post 20 June 2022 as a result of the amendments to the LSL Act.  REEFWA has updated the template contracts available to members to reflect the amendments.

The ordinary pay of an employee employed on a commission only basis, is the employee’s average weekly rate of pay earned over a period totalling 365 days ending on the day immediately before the day on which the employee commences the long service leave.

It is noted that at the time of taking long service leave, or on termination of employment, the Agent will ensure that the Employee has received sufficient payment in advance for their long service leave entitlements by calculating the value of the payments for long service leave that would have accrued had this agreement not been in place and comparing it to the amounts the that have already been paid in advance to the Employee over the relevant period under the previous version of the LSL Act.  Where necessary, the Agent will then pay any shortfall to the Employee.

For practical purposes, REEFWA’s position to LSL arrangements will apply as follows:

Employee Commencement Date7 Years10 Years15 Years
19 June 2012 19 June 2019 (no additional payments required) 19 Jun 2022 (no additional payments required) 19 June 2023 (Employer will need to make payment relating to additional 5 years’ worth of LSL)
19 June 2015 19 June 2022 (no additional payments required) 19 June 2025 (Employer will be required to make a pro-rata payment relating to 3 years’ worth of LSL (7 years were already paid under previous version of LSL Act)) 19 June 2025 (Employer will need to make payment relating to the additional 5 years’ worth of LSL)
19 June 2020 19 June 2027 (Employer will be required to make a pro-rata payment relating to 5 years’ worth of LSL (2 years were paid under previous version of LSL Act)) 19 June 2030 (Employer will be required to make a pro-rata payment relating to 8 years’ worth of LSL (2 years were already paid under previous version of LSL Act)) 19 June 2035 (Employer will need to make payment relating to the additional 5 years’ worth of LSL)

Practical Application Under Amended LSL Act

1.7% Commission

Previously, the Employee and the Agent agreed that 1.7% of the Employee’s Incentive Commission is provided as payment in advance of the employee’s future entitlement to long service leave.

An immediate option would be to reduce the Employee’s Incentive Commission by 1.7% given that portion of the commission is no longer being paid for the purpose of long service leave entitlements it previously had been used for.

LSL Fund

The Agency could arrange to set up a separate fund that captures a portion of the employee’s commission towards LSL. 

By establishing this fund, it will help the Agency in managing an employees LSL entitlements payments that are required to be be made as and when they become due.

In relation to setting up a fund, it is recommended that this is discussed with your financial adviser if there are any tax implications that may arise.

Please contact REEFWA on (08) 9365 7510 or reefwa@cciwa.com if you require assistance in managing any of these legislative changes within your workplace.

Real Estate Employers’ Federation of WA (REEFWA), the Chamber of Commerce and Industry of WA (CCI) and Business Law WA (BLWA) has taken all reasonable care in preparing this document. The contents of this document do not constitute legal advice and should not be relied upon as such.  Specific advice for your situation should be sought from CCIWA, BLWA or a professional adviser before any action is taken. Neither REEFWA, CCIWA nor Business Law WA accept responsibility for any claim that arises from any person acting or refraining from acting on the information contained in this document.

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