Retirement might feel like a distant concept when you're knee-deep in work priorities and still paying school fees, but for a growing part of your workforce, it’s right around the corner. And here’s the thing: it’s a big transition for both the employee and your business.

Handled well, supporting employees towards retirement can strengthen your organisation, protect valuable knowledge, and make succession planning a breeze. Handled poorly… well, you could lose critical skills, face morale issues, and even stumble into age discrimination territory.

So let’s talk about an underused, practical tool to support this transition: long service leave.

Be aware of the legal bits

Let’s bust a myth upfront: In Australia, there is no mandatory retirement age (except for a few very limited roles, like some defence or judicial positions).

You cannot ask or force someone to retire just because they've hit a certain birthday. Doing so could amount to age discrimination under Australian anti-discrimination laws.

What this means is that if any one of your team members is 72, still kicking goals, and loving their work, they are fully entitled to keep doing so!

However, many employees do eventually start thinking about slowing down—and that’s where sensitive, smart conversations - and strategic use of long service leave if they want - come into play.

When can employees access their superannuation?

In Australia, employees can start accessing their superannuation once they reach their preservation age (which is based on their birth year) and meet a condition of release—such as retiring.

Here’s a quick guide:

Also note at age 65, employees can access their super regardless of work status.

This gives employees the flexibility to reduce their working hours while supplementing their income through their super or long service leave.  When it comes to accessing super or how one goes about transitioning to retirement and supplementing income with super, we suggest that employees have a chat with their accountant or financial advisor to make sure they are maximising their funds and have everything set up correctly for taxation purposes.

Using long service leave to transition to retirement

Long service leave (LSL) entitlements kick in after an extended period of continuous service—usually around 7 to 10 years, depending on the State or Territory legislation.

While some will utilise their LSL to have an extended break or supplement annual leave throughout their career, LSL can be an excellent tool to help an employee gradually step away from full-time work, for example:

• Work part-time and supplement income with long service leave.
  
  
• Work part time, and reduce salary to pro rata accordingly.
  
  
• Take blocks of leave (e.g., one month off, work three months, another month off) to trial "semi-retirement".
  
  
• Fully retire after using accrued leave as a financial bridge.

For example, Denise, a senior project manager in Brisbane, has been with the company for 12 years. She’s 62, eligible for LSL, and feeling ready to slow down.

Rather than resign outright, Denise works three days a week and uses two days of long service leave weekly to maintain full-time pay while easing into retirement over 12 months.

This works really well for the business to as the company has plenty of time to plan recruitment with minimal disruption and then have Denise mentor her successor, valuable project management knowledge is captured, and Denise is able to transition to retirement feeling confident in her finances and in a timeframe that works for her and your business.

How to approach sensitive conversations

Talking about someone’s future retirement plans can feel awkward—but it doesn’t have to be if approached thoughtfully.

Here’s a simple framework:

• Focus on business needs rather than age.
  
  
• Offer support: emphasise you're willing to explore flexible options.
  
  
• Keep it open-ended: it's about planning, not pushing.

As a business leader, it’s important to have open, respectful conversations with employees about their future plans. While you must avoid discriminatory language or assumptions, there’s nothing wrong with starting a discussion. You can explain that you're reviewing the business’s future workforce needs and would like to understand what they might be thinking or hoping for. This can naturally lead to a conversation about long service leave (LSL) and how it might support a gradual transition to retirement—especially for those wanting to reduce hours but not yet ready to retire financially. Your employee might not be aware of how they can apply their LSL and a frank discussion can help you both work out what options are available.

When having such discussions, it is important to remember:

• Don’t assume someone's ability or intentions based on age.
  
  
• Document discussions carefully.
  
  
• Keep everything confidential unless otherwise agreed.

Adjustments for ageing workers

There’s no legal obligation to change working conditions if age based challenges are becoming evident.  However, if a valued employee’s physical or mental acuity is showing some sign of decline, it may be reasonable to make adjustments such as:

• Modified duties (e.g., less heavy lifting)
  
• Reduced hours
  
• Ergonomic assessments

Always balance business viability with a genuine effort to accommodate the employee where practical.

Remember, treating people with dignity and fairness at this stage builds an excellent workplace culture and protects your business brand.

The other tough conversation

While it can be uncomfortable, it's important for employers to address performance concerns sensitively and proactively—regardless of an employee’s age. Sometimes, a decline in performance may be linked to the natural effects of ageing, such as difficulty keeping pace with technological changes, slower processing, or physical limitations. This is not about age discrimination; it’s about supporting all employees to meet the expectations of their role. Avoiding the issue can lead to frustration for colleagues, affect team morale, and ultimately impact overall performance.

Approaching the conversation with care and empathy can open up meaningful dialogue. It may create space for the employee to express a desire to reduce hours, adjust workload, or begin to plan a gradual transition to retirement. Employers who can accommodate these changes not only uphold performance standards but also demonstrate respect and dignity for long-serving team members. This thoughtful approach can strengthen workplace culture and provide a win–win outcome for both the individual and the business.

Why it matters: future-proofing your business

Planning retirement transitions thoughtfully isn’t just “being nice”—it’s a core part of succession planning.

When you support a phased retirement:

• Critical knowledge stays within your organisation longer.
  
  
• Emerging leaders have time to be mentored and trained.
  
  
• Intellectual property isn’t lost overnight.
  
  
• Morale stays high across the team.
  
  
• Recruitment gaps are planned, not panicked.

Options for transitioning to retirement

There is no one size fits all approach to preparing for or deciding to retire.  As an employer, you should be aware of what might be requested and the options your business can viably manage.  To recap, the requests that may come your way – or that you might like to suggest – include:

• Move to part-time hours
  
  
• Supplement income with long service leave
  
  
• Use superannuation access post-preservation age
  
  
• Provide optional financial advice or retirement planning support (if viable)

Remember, manage discussions sensitively and respectfully and you will be able to plan for succession early and proactively. 

Final thoughts

Transitioning to retirement is a huge life moment for your employees—and a critical planning moment for your business.

Using tools like long service leave, flexible work arrangements and clear, compassionate communication, you can build a workplace where people leave with pride and their successors step up with confidence.

Thinking about the future of your workforce? Or do you have a valued team member ready to wind down but unsure how? Talk to the HR Staff n’ Stuff team to discuss future needs for your business—or how you can support employees who would like to transition to retirement while using long service leave.