Changed Approach to NSW Long Service Leave

The NSW Court of Appeal has handed down its decision in Wipro Limited v State of New South Wales [2022] NSWCA 265, departing from longstanding authority about which periods of service will count towards determining an entitlement to long service leave.

Key takeaways

Under NSW’s Long Service Leave Act, an employee is entitled to long service leave for their “continuous service” with the employer.

The Court of Appeal now says:

• employees who have worked in Australia, but outside NSW, or overseas, and who cannot demonstrate a substantial connection with NSW during that time, will not have that part of their service recognised in determining their qualifying period for long service leave;

• whether there is a substantial connection between the interstate or overseas service and NSW is to be assessed by reference to the service when it occurs rather than retrospectively on termination of employment (or earlier, if the employee tries to take the leave);

• there may be factors which connect a period of interstate or overseas service to NSW, including where the contract was made in NSW (i.e. had a NSW governing law), or the employer is in NSW and is directing the employee work outside NSW.

This now brings the NSW position into line with Victoria following the Victorian Court of Appeal decision in Infosys Technologies Ltd v State of Victoria (2021). In that case, a similar finding was made that previous employment overseas within the group did not count as service for the purposes of determining the long service leave entitlement under Victorian long service leave legislation.

The Wipro decision

The employee had worked for Wipro’s entity in India for six years, and then worked in NSW under a “Deputation Agreement” for almost five years before leaving his employment. If the employee’s service in India counted towards his continuous service with Wipro in NSW, he would be entitled to long service leave. If not, no long service leave was owing. Applying the above, the Court of Appeal found that the employee’s initial period of employment in India was a discrete period which did not have a substantial connection with NSW, and so no long service leave was owing.

Assessing service outside NSW

To assess whether there is a substantial connection with NSW, consider whether the interstate or overseas service was:

• in accordance with a secondment agreement whereby the employee was seconded to another office and/or related entity outside NSW;

• under a contract governed by NSW law;

• intended to only be for a short period of time, prior to the employee coming and/or returning to NSW;

• for an employing entity based in NSW; or

• there was another connecting factor between the interstate or overseas service and NSW, such as responsibility for, or reporting to, a team or person in NSW.

Employers must act now

Given the decision narrows which employees are entitled to long service leave under NSW legislation, employers should review how they calculate long service leave to ensure employees are being paid their correct entitlements. In particular, employers should review the long service leave accruals for employees who have moved to or from NSW while employed within the employing entity’s group.

Although the circumstances in this case were clear-cut, the decision leaves ambiguity as to when interstate or overseas service will count towards the qualifying period for NSW long service leave. If you need any help understanding these changes and their impact on your business, please reach out to one of our team.