Calculating payment components
When making a payment of unused long service leave on termination of employment you need to calculate certain payment components that have different withholding requirements. These components are:
- pre-16 August 1978
- post-15 August 1978, and
- post-17 August 1993.
Where a payee's eligible service period started after 15 August 1978, the whole payment relates to post-15 August 1978 service. A calculation of the pre-16 August component is not required.
Where the eligible service period started before 16 August 1978, you will need the following information to calculate the post-15 August 1978 and pre-16 August 1978 components:
A: the total amount being paid for unused long service leave
B: the number of whole days of unused long service leave
C: the number of whole days in the eligible service period after 15 August 1978
D: the number of whole days previously taken as long service leave
E: the number of whole days in the eligible service period, and
F: the lesser of the number of days of long service leave used after 15 August 1978 and the amount calculated by the formula C(B + D)/E*.
* For example, if you took 40 days long service leave after this date, but the formula calculates that you were only due 24 days for this period, then use 24.
Situations may arise where a previously part-time employee has moved onto full-time service during their employment with a payer. These payers, when making a payment of unused long service leave on termination of this payee's employment, need to separate the full-time and part-time service periods, but only where the eligible service period of the employee commenced prior to 16 August 1978. Then, the long service leave entitlement for each period is calculated separately.
Where the employee's eligible service period commences after 15 August 1978, there is no requirement to split the full-time and part-time service periods.
Calculating the post-15 August 1978 component
The formula for calculating the post-15 August 1978 component of the unused long service leave payment is:
You round down when working out the second part of the formula. So, if [C x (B + D)/E - F] = 117.8, then use 117.
If you get a negative answer using the formula then the post-15 August 1978 component of the payment is nil.
Calculating the pre-16 August 1978 component
To calculate the pre-16 August 1978 component, simply deduct the post 15 August component calculated above from the total payment of unused long service leave.
If the payment is being made due to:
- genuine redundancy
- invalidity, or
- under an early retirement scheme
then no more components need to be calculated.
However, if the payment is not being made under these circumstances, you will need to calculate a post-17 August 1993 component. The post-15 August 1978 component is then reduced by the amount of the post-17 August 1993 component.
Calculating the post-17 August 1993 component
The amount of the post-17 August 1993 component is calculated using the same formula used to calculate the post-15 August 1978 component but you simply substitute references to '15 August 1978' with '17 August 1993'.
To calculate the amount of this component, you need to know:
G: the total amount being paid for unused long service leave
H: the number of whole days of unused long service leave
I: the number of whole days in the eligible service period after 17 August 1993
J: the number of whole days previously taken as long service leave
K: the number of whole days in the eligible service period
L: the lesser of the number of days of long service leave used after 17 August 1993 and the amount calculated by the formula I x (H + J)/K*.
* For example, if you took 40 days long service leave after this date, but the formula calculates that you were only due 24 days for this period, then use 24.
The formula for calculating the post-17 August 1993 component of the unused long service leave payment is:
You round down when working out the second part of the formula. So, if [I x (H + J)/K - L] = 117.8, then use 117.
If you get a negative answer using the formula, then the post-17 August 1993 component of the payment is nil.
Recalculating the post-15 August 1978 component
To recalculate this component, you simply subtract the post-17 August 1993 component from the post-15 August 1978 component previously calculated.
If you get a negative answer then the post-17 August 1993 component is reduced by this negative amount.
Sections within Unused long service leave
Last Modified: Wednesday, 30 June 2010