New guidance issued by NSW Industrial Relations in New South Wales, Australia, on Long Service Leave (LSL) took effect on 1 March 2026, providing clarity on how provisions within the Long Service Leave Act 1955 should be interpreted and applied. While the legislation itself has not changed, the updated guidance promotes consistent application of the Act, reduces uncertainty for employers and employees, and supports compliance across workplaces in New South Wales.
The Long Service Leave Act 1955 has long been considered complex, with limited case law available to guide interpretation. This has occasionally created uncertainty around service calculations, ordinary pay, and the treatment of absences.
To address these challenges, NSW Industrial Relations released updated guidance and supporting resources, including a free webinar outlining the changes. The guidance is designed to remove confusion, promote consistency, and help reduce disputes while supporting compliance with the Act.
The updated guidance introduces several clarifications, including:
These clarifications are intended to help employers apply the Act consistently when determining employee eligibility and calculating entitlements.
The guidance provides detailed instructions on calculating ordinary pay for LSL purposes:
Workers Paid at a Fixed Ordinary Time Rate (Section 11A)
Where a worker’s pay is wholly based on a fixed ordinary time rate:
-
Calculate the worker’s ordinary remuneration as at the prescribed date.
-
Calculate the worker’s average weekly ordinary remuneration over the previous five years.
The employer must pay the higher of these two amounts for the employee’s long service leave entitlement.
Workers Not Paid Solely at a Fixed Rate (Section 11B)
Where a worker’s pay is not wholly based on a fixed ordinary time rate:
-
Calculate the average weekly wage over the previous 12 months.
-
Calculate the average weekly wage over the previous five years.
Again, the higher amount must be paid for LSL entitlement.
Employees with 15 years or more of service are now confirmed to receive long service leave pro rata on all service, not only on completed whole years.
The updated guidance came into effect on 1 March 2026. NSW Industrial Relations has emphasised education and guidance over enforcement for the first six months, allowing employers time to align with the new interpretation.
Past Cases
The updated guidance does not apply retrospectively. Resolved cases, including complaints, prosecutions, or completed audits, remain unaffected.
Current Cases
Ongoing complaints or active compliance audits may be impacted. In such instances, the assigned NSW Industrial Relations inspector will provide guidance on implications of the updated interpretation.
NSW Industrial Relations has also updated several resources, including:
The calculator now:
Additionally, NSW Industrial Relations offers tailored training workshops and face-to-face engagement sessions to support employer compliance.
For further detailed guidance on managing Long Service Leave obligations and payroll compliance in New South Wales, visit our Australia Global Insights on the activpayroll website.
For more information on the updated Long Service Leave guidance in New South Wales, please get in touch. Complete our Contact Us form and a member of our expert team will be happy to assist with your queries.