Long service leave entitlements refused for employees who worked overseas

Employers should consider reviewing LSL policies to ensure they are compliant

Long service leave entitlements refused for employees who worked overseas

by Abraham Ash, Director, and Maria Mamblona, Associate, Australian Business Lawyers & Advisors

The Court of Appeal in Victoria ruled that international IT company Infosys Technologies Limited (Infosys) (Case: Infosys Technologies Limited v State of Victoria [2021] VSCA 219 (11 August 2021)) had no obligation to pay long service leave to employees who claimed the entitlement after they worked in Australia for less than three years but up to a decade in India and elsewhere. The court based its ruling on employees not meeting the ‘continuous service’ threshold under s6 of the Long Service Leave Act 2018 (Vic) (the LSL Act) under which the entitlement is available after seven years.

Facts

Infosys has a large workforce based in India and occasionally deploys members of that workforce on engagements to international locations, including Australia. Infosys calls these overseas engagements ‘deputations’, and calls its employees deployed on deputation ‘deputees’. This case concerned two employees, Ms Thankappan and Ms Anbalagan, who were deputees in Victoria.

Ms Thankappan was first engaged as an engineer in India, later being assigned to the United Kingdom. She returned to India before completing a deputation in Victoria. Her total years of service in Victoria were two years and two months. Ms Thankappan resigned when in Victoria in January 2019 after combined service in the State and overseas of nine years and three months.

Ms Anbalagan was engaged as an engineer in India, where she worked for almost a decade until she became a deputee in Victoria for two years and eight months. Ms Anbalagan resigned in Victoria in September 2019, after combined service locally and in India of more than 12 years.

Both employees complained to the Wage Inspectorate Victoria about Infosys failing to pay their long service leave entitlements. Upon the Wage Inspectorate Victoria ordering that Infosys make payment of long service leave, Infosys appealed the decision maintaining it was not obliged to make payment of long service leave to these former employees.

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Decision

The court ruled that the reference to ‘seven years of continuous employment with one employer’ found at s6 of the LSL Act is properly construed as seven year of continuous employment with one employer in and of Victoria. Notably, there is an absence in the LSL Act demonstrating a contrary intention.

Ms Thankappan and Ms Anbalagan could not show seven years of continuous employment in Victoria, or for a Victorian company. Their employment continued to be subject to Indian legislation while on deputation in Victoria. Where a connection in fact existed, Ms Thankappan and Ms Anbalagan would have been immediately able to take long service leave upon arriving in Victoria. This was deemed to be an ‘absurd’ outcome due to its practical inefficiencies.

Continuous employment in and of Victoria with one employer requires a close identification between the continuous employment and the state of Victoria. In circumstances where an employee is employed by a Victorian company and is seconded to work for a related corporation outside of Victoria, the period of the secondment would have a close identification with Victoria. This would mean the employment period of the secondment would qualify as continuous employment.

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Key lesson for business

In Victoria, employees will not receive the benefit of long service leave where part of their service was commenced overseas. This is the Victorian position and the position of other States may vary or indeed be influenced by this decision. The current position in New South Wales is that it is not necessary that all service should be substantially connected with New South Wales, but it is essential that at the time of completion, termination or cessation, the employee’s service may be said to be New South Wales service as determined in International Computers (Australia) Pty Ltd v Weaving (1981).

Employers should consider reviewing long service policies to ensure they are compliant with their state legislative requirements and that employees are fully informed on all entitlements and to clarify potential issues that may save thousands later in defending legal positions.

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