Q/ Our General manger has asked why we should accrue LSL on-costs from day one? If you have any supporting documentation/website link that you can forward me, it would be a real help.
A/ While companies usually do not have to make LSL payments for their employees until after 5, 7 or 10 years (depending on the circumstances) employers need to start providing for these potential expenses to ensure there is no impact on the company resources should there be a requirement to make these payments. Companies should be setting aside sufficient funds in an account separate from the regular business accounts to meet this potential liability.
The rules about how much needs to be set aside is found in the Australian Accounting Standards Board accounting standard for employee benefits. It covers the standards for both short term benefits (such as annual leave and sick leave) and long term benefits (such as long service leave).
The standard for employee benefits is available and free to download from www.aasb.gov.au (search employee benefits under latest pronouncements)