Legal Comment from Mark Illidge of Hinterland Lawyers 

April 2004 

A recent decision by the Queensland Industrial Relations Commission (QIRC) permitting an employee in financial hardship to cash-in his long service leave (LSL) to use as a deposit on a house, creates significant implications for Queensland employers.

A thirty-six year old public servant obtained payment of approximately two-thirds of his LSL because he needed funds for a deposit on a house.  The employee had no means to save for a deposit and previous marital  relationships and financial misfortune had compounded his current financial position.

The commission held that his inability to purchase a family home because of lack of a deposit fell within the meaning of "financial hardship" as defined in the Industrial Relations Act, which permits the Commission to make an order to cash-out LSL on the grounds of financial hardship or upon compassionate grounds. It should be noted that the applicant intended to use the money for the purchase of his principal place of residence and not an investment property.

This decision has broadened the scope of financial hardship to include a persons' inability to take steps to enjoy future investment and benefits. Future QIRC decisions will probably take into account whether the employee seeks to cash-in all or part of their LSL and whether they have the ability to save for a deposit on a house.

Some employers will welcome the broadened scope because if more employees apply, employers can reduce their liability sooner rather than later without losing workforce time on the job. These employers may wish to negotiate with employees to reach an agreement permitting cash-in of LSL without recourse to the Commission. The Industrial Relations Act allows employers and employees to reach such agreements in Enterprise Agreements.

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