Key Takeaways
- Long Service Leave (LSL) is a state-governed entitlement that is usually due after **10 years** (or **7 years** for pro-rata).
- The entitlement is **not** paid by the government; it’s an expense your business must be prepared to pay.
- In 2026, many modern awards and enterprise agreements have their own specific LSL rules that override state law.
In 2026, as the "Great Resignation" era is well and truly over, many long-term employees are reaching the 10-year milestone at their companies. For an Australian business owner, this means a significant financial liability—Long Service Leave (LSL). However, calculating LSL is notoriously difficult because every state has its own formula. Here is how to navigate the 2026 rules for NSW, VIC, and QLD.
The NSW Long Service Leave Act
In New South Wales, the entitlement is relatively generous for employees.
- Entitlement:** 2 months (8.6667 weeks) of leave after 10 years of continuous service.
- Pro-Rata:** If an employee leaves after **5 years** (but before 10) due to illness, incapacity, or domestic/pressing necessity, they are entitled to a pro-rata payment.
- Calculation:** LSL is paid at the employee's **ordinary rate of pay** at the time the leave is taken.
The Victorian Long Service Leave Act (2018)
Victoria has some of the most complex and protective LSL rules in Australia.
- Entitlement:** 1/60th of the total period of continuous employment (roughly 8.66 weeks after 10 years).
- Pro-Rata:** Employees in Victoria can **take** their leave after **7 years** of service.
- Portable LSL:** In some industries (like community services or contract cleaning), LSL is "portable" and moves with the employee.
The Queensland Industrial Relations Act
- Entitlement:** 8.6667 weeks of leave after 10 years.
- Pro-Rata:** Entitled to a pro-rata payment if they have **7 years** of service and are terminated by the employer (except for misconduct).
- Sick Leave:** While on LSL, employees in QLD are still entitled to take paid sick leave (conditions apply).
⚠️ Note: You must record LSL as a **Liability** in your Balance Sheet from 5-7 years onwards. This ensures your Profit & Loss reflects the true cost of your employees over time, not just when they actually take the leave.
Summary: Better Data, Less "Super Shock"
A $20,000 LSL payment for a 10-year staff member shouldn't be a surprise that hits your bank account without warning. At PrepMyBook, we help our clients calculate their "LSL Provision" every month so they know exactly what their future liabilities are. Let's make 2026 your most financially prepared year yet.
Audit Your Employee Entitlements
Our HR and payroll specialists can correctly calculate your LSL liabilities across every state and ensure your staff are paid correctly. Let's protect your cash flow from unexpected payouts.
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