Information regarding long service leave entitlements and principles is contained in the applicable industrial instrument. The information below may provide further clarification.
The applicable University of South Australia industrial instruments include a provision for employees to cash in their Long Service Leave (LSL) entitlement.
Industrial Instrument: The applicable Collective/Enterprise Agreement, Award, Australian Workplace Agreement, contract of employment or legislation.
Employees who have an entitlement of 91 calendar days (pro rata for fractional staff – see the table below) may cash in this entitlement. Current leave balances are available through UniSAinfo and the employee’s payslip.
Long Service Leave Entitlement Required
Full time staff 91
0.9 fraction 81.9 calendar days
0.8 fraction 72.8 calendar days
0.7 fraction 63.7 calendar days
0.6 fraction 54.6 calendar days
0.5 fraction 45.5 calendar days
0.4 fraction 36.4 calendar days
Please note: this table assumes that the employee’s fraction has not changed during the past 10 years. If the employee’s fraction has changed at anytime during employment their LSL entitlement will have been affected. Queries should be directed to the local HR Contact or Payroll Services.
Employees who have an entitlement of 91 calendar days (pro rata for fractional staff – see the table) may apply to have their total entitlement or part of their entitlement (minimum of 7 days) paid in cash in any year of service.
John (a full time employee) has a LSL entitlement balance of 151 calendar days. On 1st June he makes a request for 30 calendar days of his balance to be paid to him in cash. John’s balance reduces to 121 calendar days. On 1st August John makes another request for 30 calendar days to be paid to him in cash. John’s balance reduces to 91 calendar days. On 1st October John makes a third request for payment of 30 calendar days to be paid to him in cash. John’s balance reduces to 61 calendar days.
A written request must be made to Payroll Services using the Cashing in Long Service Leave Application form HRIS 022 available from the Human Resources web site. Manager’s authorisation is unnecessary.
LSL is held in the system and is taken (or paid) in calendar days. Therefore 7 LSL days is equivalent to 1 weeks salary (ie – 5 working days). Employees must apply to cash in their LSL in calendar days. For example: if an employee nominates 91 LSL calendar days to be paid to them in cash they would receive a payment of 13 weeks salary (ie: 91 calendar days / 7 calendar days per week).
The employee’s LSL entitlement balance will decrease by the number of calendar days that the employee nominates on the HRIS 022 form. Employees should be aware that once payment is made they have no further claim to the part of their entitlement that was paid to them in cash. See the example below:
Sarah has a balance of 91 calendar days. She makes a request to have 40 calendar days paid to her in cash. Sarah receives a payment of $2,900 and her entitlement balance is reduced to 51 calendar days.
Payment will be made by Payroll Services in the first available pay following the receipt of the request – payroll cut off dates will apply. This payment will be paid to the employee’s ordinary bank account as held on the payroll system. If the payment is to be made to another bank account these instructions must be included with the initial request.
The payment will be taxed at the employee’s marginal rate of tax. The tax savings that are received on termination are not applicable. The payment must be declared as normal gross salary on the employee’s group certificate and therefore will be taxed the same as normal gross salary. Please see the example below (please note the tax amounts are not accurate, they are an example only):-
Jane receives an annual income of $30,000 (before tax) and normally pays $5,000 tax on this amount each year. Jane receives an amount of $10,000 (before tax) for the LSL she has cashed in. This makes Jane’s annual income for this financial year $40,000 (before tax). The amount of tax payable on $40,000 is $8,000. Therefore Jane has a debt of $3,000 payable on receipt of the $10,000 for her LSL. Jane will receive $7,000 net paid to her in her next pay.
Please note: Receiving a cash payment for LSL will increase the employee’s total taxable income for the financial year in which it is paid. This may have an effect on any taxation benefits that the employee receives.
LSL that has been 'cashed in' does not attract any superannuation contributions. Employees may transfer their lump sum payment of LSL into a superannuation fund. However it will be taxed at the employee’s marginal rate of tax and treated as a post-tax voluntary lump sum contribution (also known as an undeducted contribution).
Please discuss the cashing in LSL superannuation implications with the University of South Australia's Superannuation Officer firstname.lastname@example.org or phone ext 22911.
Any further queries regarding cashing in of LSL should be directed to the employee’s Local HR Coordinator/Contact or Payroll Services PayrollServices@unisa.edu.au, phone ext 22911.
Independent financial and taxation advice is advised prior to making a request for payment.