Long Service Leave changes explained: are you meeting the new requirements?

Long Service Leave (LSL) has long been one of the most misunderstood areas of employment compliance in New South Wales. With evolving work arrangements, varying employment types, and inconsistent interpretations over the years, many businesses have faced uncertainty, and in some cases, costly disputes, around employee entitlements.

That’s now changing.

The NSW Government has released updated Long Service Leave guidance in March 2026, providing much-needed clarity on how LSL should be calculated, applied, and managed across a wide range of employment scenarios. For employers, this marks a significant shift, and an important opportunity to ensure compliance.

What’s changed?

The updated guidance provides clearer direction on several key areas, including:

• Accurate LSL calculations
  Improved guidance on how to calculate entitlements, particularly for employees with irregular hours, bonuses, or varying pay structures.
• Pro-rata entitlements
  More detailed explanations around when employees may be entitled to pro-rata LSL, especially in cases of resignation, redundancy, or termination.
• Casual and part-time employees
  Clarification on how continuous service is assessed for non-full-time employees, an area that has historically caused confusion.
• Service continuity and breaks
  Updated interpretation of what constitutes “continuous service,” including how gaps, stand-downs, or changes in employment status are treated.
• Record-keeping obligations
  Reinforced expectations for employers to maintain accurate, detailed records to support compliance.

Why this matters for employers

These updates are not just administrative, they carry real risk if misunderstood or ignored.

Incorrect LSL calculations or misinterpretation of entitlements can lead to:

• Employee disputes and claims
• Back payments and penalties
• Reputational damage
• Increased scrutiny from regulators

With clearer rules now in place, there is less room for ambiguity, meaning businesses are expected to get it right.

What you should do next

If you employ staff in NSW, now is the time to:

• Review your current LSL policies and calculations
• Audit employee records and entitlement tracking
• Ensure payroll systems align with the updated guidance
• Seek advice where situations are complex (e.g. long-term casuals, variable hours, or employment breaks)

Need help navigating the changes?

If you’re unsure how the new guidance affects your business, or you want to review your LSL practices, our highly experienced employment law team can help you navigate the changes and ensure you’re fully compliant.

Staying proactive now can help you avoid issues later, and give you confidence that your business is meeting its obligations under the updated LSL framework.

Contact our employment law team today for understand how we can help you navigate this new law.