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Long service leave recognises the contribution of employees who have provided long and continuous service to the same employer by granting them a period of paid leave in addition to other statutory and contractual entitlements.

Many people are aware that long service leave usually becomes available after 10 years of service. What is less well known is that, in certain circumstances, an employee in New South Wales may be entitled to a pro rata long service leave payment after completing five years of service, even if they have not yet reached 10 years.

In NSW, long service leave is governed by the Long Service Leave Act 1955 (NSW) (the Act). Under that legislation, most employees become entitled to two months, or 8.67 weeks, of paid long service leave after completing 10 years of continuous service with the same employer. After the initial 10-year qualifying period an employee generally accrues a further one month’s long service leave for each additional five years of service.

Long service leave applies to a broad range of employees, including:

• full-time employees;
• part time employees including those whose hours fluctuate;
• casual employees;
• employees paid solely by commission or by a combination of salary and commission;
• pieceworkers; or
• out workers.

The method of calculating an employee’s entitlement may differ depending on their working arrangements and employment circumstances.

For employees whose hours of work have varied over time, including many casual and part-time employees, long service leave is generally paid at the worker’s ordinary rate of pay calculated in accordance with the Act. The method of calculation can be complex where hours or earnings have fluctuated over the relevant employment period.

Employment ending before 10 years of service

A common question is what happens if an employee’s employment ends before they reach 10 years of service.  The answer depends on both the length of the employee’s service and the reason the employment ended.

If an employee has completed less than five years of continuous service, they will generally not be entitled to along service leave payment (including on a pro rata basis) under the NSW legislation.

Once an employee has completed at least five years, but less than 10 years, a pro rata entitlement may arise if the employment ends in specified circumstances.

A pro rata payment means the employee receives a proportion of the long service leave entitlement they would have received after 10 years, based on the amount of service they actually completed. For example, if an employee worked for 7.5 years, they have completed 75 per cent of the 10-year qualifying period.  The employee would receive 75 per cent of the 10-year entitlement, assuming the other legal requirements are satisfied.

Between five and 10 years an employee may be entitled to pro rata long service payment if:

• their employment is terminated by the employer for any reason other than serious and wilful misconduct;
• they resign because of illness, incapacity, domestic or other pressing necessity; or
• they die during their period of employment.

The second category is often the most difficult to interpret. Not every resignation will qualify. For example, an employee who resigns simply to pursue a new job, change careers or move to a different workplace will generally not be entitled to pro rata long service leave before reaching 10 years of service.

Rather, to enliven the second category, the resignation must be connected to one of the recognised reasons, such as illness, incapacity, or a genuine domestic or other pressing necessity.  The phrase “domestic or other pressing necessity” has been the subject of considerable judicial consideration.  Broadly speaking, it refers to circumstances in which the employee is genuinely compelled to resign because of significant personal, family, domestic, financial or other pressing circumstances.  It is not enough that resignation is convenient or preferable.  The circumstances must be sufficiently serious that they explain why the employee felt they had little practical choice but to leave their employment.

In cases where an employee dies after completing at least five years of service a pro rata long service leave payment is generally payable to the employee’s legal representative.  This recognises that the entitlement has accrued through the period of service, even though the employee did not live to take the leave.

Long service leave entitlements under an award, enterprise agreement or other industrial instrument may be more generous than the minimum entitlements provided under the Act.

On termination of employment any long service leave entitlement may be payable in addition to other termination entitlements, including notice (or payment in lieu of notice) redundancy pay, where applicable accrued annual leave and any other amounts owing.

Continuous service

To qualify for long service leave, an employee’s service must be continuous.  Importantly, continuous service can include more than just time worked and can include certain paid and unpaid absences.  Periods of parental leave, both paid and unpaid, generally will not break a employee’s continuous service.  While unpaid parental leave does not count in the calculation of periods of time of service, paid parental leave does count for the purpose of calculating long service leave entitlements.

State based entitlements

It is also important to remember that long service leave laws are state based. The rules in NSW are not identical to those in other states and territories in Australia.

Employees and employers should therefore be careful not to assume that the same pro rata rules apply across Australia.  Some industries may also have special arrangements, including portable long service leave schemes.  Service NSW notes that the laws are complex and that special arrangements apply for certain industries and employees.

Final thoughts

Pro rata long service leave can make a significant financial difference to an employee whose employment is coming to an end, particularly when employment ends because of illness, incapacity, redundancy or pressing personal circumstances.  As the entitlement depends on the reason employment ended and the employee’s period of continuous service, both employees and employers should seek advice if there is uncertainty.  A careful review of the circumstances can help ensure that employees receive their proper entitlements and that employers meet their obligations under NSW law.

Disclosure and important note: This article is based on our own legal research and thinking. Some of its content has been drafted with the assistance of artificial intelligence. The authors have checked and approved this article, including the AI generated content, for publication.

This article was published on 12 August 2026 by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact us page on our website. (www.codea.com.au).