Resignation and long service leave payments in New South Wales

Updated: 8 December 2019

If an employee resigns, they may have a right to a long service leave payment in New South Wales.

Below are the rules for a payout of long service in the case of a resignation.

If the employee resigns after 5 years service, pro rata long service leave is paid out per section 4(2)(a)(iii) of the Long Service Leave Act 1955 (NSW), if the resignation is because of:

• illness; or
• incapacity; or
• domestic or pressing necessity.

And the employee will need to include the above reason in their written resignation.

Employee claims

It’s important to be fair in all your dealings with employees.

Employees can apply to the court for unpaid long service leave and the court may make an order for the employer to pay this amount.

If an application is made, the court may make any order it thinks is just and may award costs to either party.

Disputes

Now, if there is a dispute about whether long service should be paid and it ends up in court, the tests below from Computer Sciences of Australia v Leslie 1983 will apply:

1. is the reason within the exceptions in section 4(2)(a)(iii) above?
2. was the reason genuinely held by the employee?
3. was it the real and motivating reason? (it does not have to be the sole reason)
4. would a reasonable person in that employee’s position feel compelled to terminate their employment for that reason also?