Work out your long service leave provision
AASB 119 · AASB 101How the provision is measured
Long service leave is an "other long-term employee benefit" under AASB 119 (para 153). It is measured as a present value: the leave built up so far, at the pay expected when it is paid, weighted by the chance each employee stays long enough to qualify, and discounted back to the balance date (paras 67-90).
Here t is the years until the leave is expected to be paid. The calculator also shows the nominal amount (accrued weeks × today's pay) for comparison.
For a full example with every number, the balance-sheet split and the entries, see accounting for long service leave.
The discount rate
AASB 119 para 83 says to use market yields on high quality corporate bonds of a matching term, or government bond yields where there is no deep market in such bonds. Not-for-profit public sector entities use government bond yields (para Aus83.1). The Reserve Bank publishes both in its statistical tables (F2 for government bonds, F3 for corporate bonds). There is no default rate here: you choose it.
Current or non-current
In the balance sheet, a liability is current if the employer has no right to defer paying it for at least 12 months (AASB 101 para 69(d)). Staff who have qualified can take their leave, so their amount is current even if you expect them to wait. This calculator also treats staff who qualify within 12 months as current.
What this does not do
- It is a simplified estimate, one expected payment date per employee. AASB 119 para 60 allows short cuts where they give a reliable approximation. Larger employers usually get an actuarial valuation.
- Pro rata payouts before the qualifying period (for example on dismissal or illness) are covered by the probability, not modelled separately.
- On-costs are not addressed in AASB 119. Add a loading only if your accounting policy includes them.
Common questions
Is long service leave a current or non-current liability?
Both, usually. Leave for staff who have reached the qualifying period is current, because the employer cannot defer it for 12 months (AASB 101 para 69(d)). Leave for staff who have not yet qualified is non-current.
What discount rate should I use for long service leave?
AASB 119 para 83: the market yield at the balance date on high quality corporate bonds with a term matching the expected payments, or government bond yields if there is no deep market in high quality corporate bonds. The AASB does not currently say which applies in Australia; it is the entity's judgement. Not-for-profit public sector entities must use government bonds.
Do I include employees who have not reached 7 or 10 years?
Yes. AASB 119 para 72 says an obligation arises as employees render service even before the benefit vests, taking into account the probability that some will not reach it. That is why the calculator weights them by probability.
Is this the same as a small business provision?
Many small entities measure the provision more simply. AASB 119 still applies to general purpose financial statements; the simpler nominal figure is shown here for comparison.
Official sources
- AASB 119 Employee Benefits – compiled, Compilation no. 5 (31 Dec 2022), applies to periods beginning 1 Jan 2023 to before 1 Jul 2026
- AASB standards portal – AASB 119 July 2026 (uncompiled amendments)
- IAS 19 Employee Benefits – Basis for Conclusions (2011), published by the AASB
- AASB 101 Presentation of Financial Statements – compiled, applies to periods beginning on or after 1 Jan 2024
- AASB 137 Provisions, Contingent Liabilities and Contingent Assets – compiled Dec 2022
- AASB Board Agenda Decision – Classification of Long-Service Leave Liabilities (Dec 2005)
Rules last reviewed 3 November 2026. Every figure comes from the Acts, the regulators, the ATO and the AASB; see sources and method.