Australia: Assessing overseas service in relation to NSW companies – The fog is starting to clear

Whether to recognise an employee's overseas service with a related company or not, has long been a source of dispute when determining local long service leave entitlements.

For decades, the answer hid somewhere in the fog of whether there was a "sufficient connection" between that overseas service and the local jurisdiction (i.e. New South Wales). Caselaw from the 70's and 80's established the approach that the sufficiency of that connection was to be assessed retrospectively at the time the long service leave entitlement was claimed (for example, once the employee had potentially completed 10 years of continuous service, or on the termination of the employment).

The absence of clear caselaw as to what constituted a "sufficient connection" was the primary source of the disputation, but its prevalence was exacerbated by the comparatively small monetary value of most disputes (resulting in commercial resolutions, rather than judgements that might have removed the ambiguity sooner).

While similar ambiguity existed in Victoria, the issue was clarified in a 2021 judgement which examined the operation of the more recent 2018 Victorian long service leave legislation.

While there has been no legislative re-write in New South Wales, the issue has now finally been resolved with a unanimous judgement of the Court of Appeal. Specifically, the Court of Appeal clarified that the answer as to whether overseas service with a related company has a sufficient connection to New South Wales is to be assessed at the time the service occurs (not retrospectively at the time the entitlement is claimed).

In practical terms, this will mean that where an employee's overseas service with a related company, as it was occurring, had no substantial connection to New South Wales, it will not constitute continuous service for the purpose of determining the employee's long service leave entitlements in New South Wales.

Of course, each employee's circumstances will still need to be considered on its merits, but it's important that employers begin taking immediate steps to ensure their policies and processes are aligned with the new clarity. Employers also need to begin the equally important task of resetting employee expectations around the treatment of overseas service.