Long time coming: NSW's new long service leave guidance is here

Updated guidance on the Long Service Leave Act 1955 (NSW) released by NSW Industrial Relations and effective from 1 March 2026, aims to clarify how the complex, 70-year old Act is applied, particularly how long service leave entitlements are accrued, calculated, paid and taken in NSW.

Continuous service for casual workers

The new guidance introduces a clearer framework for establishing continuous service in relation to casual workers, with a particular change in assessing absences for casual workers.

To determine whether the individual engagements of the casual worker can be tied together to form continuous service, employers should establish a pattern of service based on the:

1. regularity of the engagement;

2. time between engagements; and

3. reasons for the time between the engagements.

The NSW Industrial Relations has emphasised that establishing continuous service for casual workers needs to be done on a case by case basis, and where there have been any departures, employers will need to look at the reason why there were breaks in the casual's workers pattern of service.

Where a break is up to, or even exceeds, two months, it may not break the casual worker's continuous service where the absence falls within one of the categories set out in section 4(11)(a1) of the Act. This includes absences due to illness or injury, absences arising from an industrial dispute, or absences caused by the employer by reason of slackness of trade.

In terms of record-keeping, employers will not be expected to assess every zero hour week or every absence – only departures from the casual worker's established pattern of service.

Calculating ordinary pay

The new guidance provides updated practical advice on how to determine a worker's ordinary pay for the purposes of calculating long service leave entitlements. The critical reference point is the prescribed date, being the day before the worker commences leave, or the day before they resign from their employment (if the employer is paying out their long service leave entitlements).

Workers fall into one of two categories under the Act:

• Workers remunerated wholly in relation to an ordinary time rate of pay fixed by the terms of their employment. This typically applies where the workers has a predictable, fixed rate of pay, such as a salary, without bonuses or higher duties allowances (section 3(1)(a)).

• Workers remunerated otherwise than wholly in relation to an ordinary time rate of pay so fixed. This typically applies to workers who receive incentive payments, bonus schemes, higher duties allowances, or whose pay otherwise fluctuates. The new guidance provides specific formulas for the calculation of entitlements in this category (section 3(1)(b)).

Calculating ordinary hours for workers with fluctuating hours

The new guidance also provides clarity on calculating ordinary hours of work for workers with fluctuating hours. This addresses the increasingly common scenario of workers with variable hours, including casual workers, and permanent part-time workers who regularly work above their minimum contracted hours. The guidance provides formulas for working out the ordinary remuneration at the prescribed date, and average weekly ordinary remuneration over a five-year period.

Treatment of bonuses

The new guidance clarifies when bonuses must be factored into long service leave calculations. For a bonus to be relevant, it must form part of a scheme – although it need not be described as a "bonus" – and the assessment is a fact-based one that considers whether a bonus or incentive scheme is in place. If, on the prescribed date, the worker is eligible for such a scheme, they will generally fall within section 3(1)(b) of the Act, and the bonus component will be integrated into the calculation.

Accruals after 15 years of service

The former guidance said that after 15 years of service, the worker had to complete full years before they were entitled to receive the recognition of that period of service.

The new guidance pivots from this position, and now recommends that all service over 15 years be recognised for the purposes of long service leave, not just completed years. For example, a worker with 15 years and 11 months service should have all for that service recognised, not just the 15 completed years.