Employees are entitled to long service leave when they have worked for the same employer over a minimum period (between 7 and 10 years depending on which state or territory legislation applies). Recently, the Federal Court considered whether an employee’s time working overseas will count towards service for long service leave purposes.

In Cummins South Pacific Pty Ltd v Keenan (2020), an employee who had 14 years’ employment in the UK before commencing with a related company in Victoria argued that the years in the UK should be counted for the purposes of his entitlement under the Long Service Leave Act 2018 (Vic).

The legislation provides that, when determining whether an employee of a company has the requisite service to have an entitlement to long service leave, you count previous employment with a related body corporate of that corporation (using the Corporations Act 2001 definition of related body corporate). This provision deems service with the related corporation as service with the final employer.

The majority decision of the Federal Court applied the test that if, having regard to the years of service closest to when liability to provide the long service leave entitlements arose, the service provided by the employee may be fairly characterised as ‘Victorian service’, then the deeming provision would operate to include the UK service with a related company.

In this case, the service of the employee was service of some 34 years. Approximately 20 years, or 60%, of that service was provided to a Victorian-based employer. Of that service, some 12 years was provided in Victoria, including the last 1.75 years. According to the majority decision, those features demonstrated a substantial connection between employee’s service and Victoria, sufficient to characterise that service as Victorian service.

The minority decision disagreed. The dissenting Judge accepted that service or employment performed outside Victoria could be counted for the purposes of calculating an employee’s long service leave entitlement under the Victorian legislation. However, there needed to be a substantial connection between Victoria and the employee’s performance of their duties outside Victoria. In this case, the dissenting Judge considered that the extended period of employment in the UK did not have any connection with Victoria.

Both decisions applied the substantial connection test, but in a different way to achieve different results.