We often have discussions with vendors and buyers about longer service leave when buying or selling a business.

This is general information and during the business sales process your legal advisors would look at your specific situation, so as always seek legal advise when the time comes.

The Business Victoria, Victorian government has detailed information on long service leave available here

It’s worth noting that the act is changing on 1st November and the page will be updated

Long Service Leave changes coming 1 November 2018

The Long Service Leave Act 2018 will come into effect on 1 November 2018 and supersede the 1992 Act.

These changes include:

  • greater flexibility for women, families and people transitioning to retirement
  • access to long service leave after seven years, not ten
  • allowing employees to take long service leave in smaller increments (i.e. for any period of one day or more)
  • most absences from work do not break continuous employment
  • unpaid leave, including parental leave, counts towards long service leave
  • increased penalties for employers who do not keep records or do not produce them when requested.

This website, including the Long Service Leave calculator, will be updated to reflect those changes on 1 November.

Read the Long Service Leave Act 2018 FAQs

Many things won’t change and we do get common questions so here’s a few.

Can long service leave be paid out?

This is the most common question, long service leave is not paid to the employee on sale on the business it is paid if they leave or if they take it.

What happens if the business is sold?

Again from the Victorian Business website

  • If a business is sold and the purchaser employs employees of the former owner, the new employer is responsible for their entire period of service with the business.
  • To account for the value of the entitlement, sometimes a trust fund is established, or the liability may be factored into the sale price of the business.
  • Irrespective of the arrangement, the new employer will automatically be responsible for the employees service with the former owner and the current owner.
  • If the new owner fails to recognise the service with the former owner, and fails to pay the correct long service leave to employees, they will be in breach of the LSL Act.
  • A breach of the LSL Act is a criminal offence and an employer may be liable for a fine and a criminal conviction, and other costs and penalties.
  • Any LSL entitlement with the former owner should not be paid out to the employee by the former owner.

Visit our page on long service leave: change of employer for more information.

Overall your legal advisors will work with you on the long service entitlements as you move towards the settlement date.

Questions? Send us a quick message: