Long Service Leave on Termination

Long Service Leave is an entitlement that may need to be paid out during a Termination payrun.

Long Service Leave (LSL) begins accruing when an employee begins work. When employment ends before an employee has worked the total number of years needed to take their LSL entitlement, they can be paid out for part of their entitlement under certain circumstances and criteria. This is known as pro-rata long service leave.

There are different laws within Australia governing pro-rata LSL payouts, varying by state or territory. If unsure about the entitlements for your particular state or territory, you may wan to refer to the Fair Work Ombudsman, and specifically the LSL page.

During a termination payrun, the employer may need to manually add the “LSL Payout (Normal)” pay component and copy across the “LSL Balance” amount. Due to the complexity of LSL entitlements by state, the payroll system doesn’t automatically add this information during the termination process, and leaves it up to the Payroll Administrator to decide on the relevance.

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