It appears that contracts at PX aren't worth the paper they are written on, as the company keeps changing the goal posts to suite themselves. I believe the person concerned does have something in writing from many moons before.
My sources also advise me that it is the law in PNG for any employee (expat or national) who is taxed in PNG to be entitled to LSL, it starts accumulating after 3 years of service I believe.
I also though the idea was a novel concept when I first heard of it, but it appears there may be some substance to it. I do know that APNG pay it.