Employment & Safety Update – 3 June 2020

Employee leave entitlements: Case notes

This article discusses two recent employment law cases concerning the leave entitlements of workers who:

  • have been lawfully stood down; and
  • are engaged as casual but may still be considered permanent due to regularity of their working hours.

Case note 1: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656 (18 May 2020)

The Court determined that employees of Qantas are not entitled to access paid personal and carers leave or compassionate leave when they have been stood down without pay. This means that businesses that lawfully stand down employees (including as a result of COVID-19) will not be required to grant employees access to paid personal/carer’s leave or compassionate leave.

In March 2020, Qantas stood down two thirds of its 30,000 employees without pay because, through no fault of its own, it had no work that the employees could usefully perform. Qantas denied the employees who had been stood down paid personal or carer’s leave. Four unions launched proceedings on behalf of employees, claiming that they were entitled to access paid personal/carer’s leave or compassionate leave during their stand down.

There was no dispute that employees had lawfully been stood down under section 524 of Fair Work Act 2009 (Cth) (the Act). The question the Court was required to decide was whether the workers could access paid personal/carer’s leave while stood down without pay.

The Court:

  • Confirmed, in line with previous cases, that leave entitlements are a form of income protection. The purpose of income protection cannot be fulfilled where the employee has been lawfully stood down and no income is being earnt because no work is available for the employee to perform.
  • Rejected the unions’ argument that an employee who takes personal / carer’s leave is not to be taken as having been stood down because the entitlement to take such leave is said to be an “authorised absence” or an “authorised absence from work” under section 525(b) of the Act. The Court stated that section 525 of the Act does not refer to personal or carer’s leave but rather an entitlement to be paid for authorised absences such as public holidays, jury service or for other eligible community service activities.

Ultimately, on 18 May 2020 the Federal Court found that Qantas is not required to pay personal/carer’s leave to employees stood down without pay during the COVID-19 pandemic.

Case note 2: WorkPac Pty Ltd v Rossato [2020] FCAFC 84

In WorkPac Pty Ltd v Rossato, the Federal Court of Australia was required to determine whether an employee engaged as a casual, who worked regular and systematic hours, was entitled to the paid leave entitlements of a permanent employee.

The Court ultimately confirmed the earlier decision of WorkPac Pty Ltd v Skene that a casual employee who worked regular and systematic hours was also entitled to the paid leave entitlements of a permanent employee. However, Rossato takes Skene further to prevent an employer claiming back the casual loading paid to the employee.

During his employment with WorkPac, Mr Rossato was engaged under six separate casual employment contracts. His roster allocated shifts up to 7 months in advance and were regular and predictable. The Court found that he was a permanent employee and should be entitled to paid leave entitlements.

WorkPac argued that it should be able to use the 25% casual loading that was paid to Mr Rosatto to ‘set off’ the outstanding leave entitlements. The Court rejected this for a number of reasons, including that the employment contract did not contain an express set off clause, and the amounts paid to him were not designated in respect of leave entitlements.

The Court also found that WorkPac could not seek restitution for the casual loading amount paid to Mr Rossato because the casual loading was not separately identifiable from his ordinary rate of pay. It was not certain that WorkPac paid him the extra amount because they mistakenly classified him as a casual employee.

Following this decision, it is important for employers to:

  • be aware of the working patterns of casual employees to ensure they are correctly characterised and not deemed permanent; and
  • review the wording of employee contracts to ensure that it can, where possible, offset any casual loading payment against permanent leave entitlements in the event that it is later found that a casual employee should have been characterised as a permanent employee.

If you have any queries or would like further information about this article, please contact:

Joe Mullavey
Principal
M: 0416 794 061
E: jmullavey@pageseager.com.au

Published: 3 June 2020

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