Legal Insights

Federal Court says no entitlement to paid personal leave while on stand down

By Maree Skinner & Rema Hamdan & Aman Dhingra

• 21 May 2020 • 4 min read

In a decision that will affect many businesses and employees during the COVID-19 pandemic, the Federal Court has ruled that employees are not entitled to access paid personal leave during a period of stand down.

The ruling on 18 May 2020 arose from applications brought by the Transport Workers’ Union (TWU) and the Qantas Engineering Alliance, comprising of the Australian Manufacturing Workers' Union, the Australian Workers Union and the Communications, Electrical and Plumbing Union (Unions) on behalf of Qantas employees.

In finding for Qantas, Justice Flick held that paid sick leave is a form of income protection and that workers who are stood down without pay do not have any income to protect. To enable employees to access paid sick leave while stood down, he stated, ‘would go against the very object and purpose of conferring those entitlements – namely an entitlement to be relieved from the work which the employee was otherwise required to perform.'

Background

In March 2020, Qantas stood down approximately two-thirds of its 30,000 strong workforce in response to the COVID-19 pandemic and its impacts on the aviation industry. Where an enterprise agreement applied, the employees were stood down under the relevant agreement. Those employees not covered by an enterprise agreement were stood down under section 524 of the Fair Work Act 2009 (Cth) (Fair Work Act).

Under section 524, an employer can stand down employees without being required to pay them if the employee cannot be usefully employed due to a stoppage of work for which the employer cannot be reasonably held responsible. The relevant enterprise agreements contained stand down clauses materially similar to the Fair Work Act provisions.

For those employees with accrued personal (sick) leave, carers' leave and compassionate leave, Qantas determined that these entitlements were not available to employees who were stood down. However, it continued to enable employees to access accrued annual leave and long service leave.

The applications brought by the Unions sought to challenge Qantas' interpretation of the entitlement to personal leave under the National Employment Standards (NES) during a stand down.

The Unions argued that section 525(b) of the Fair Work Act, which provides that an employee is not taken to be stood down during a period when they are authorised to be absent from their employment, means that an employee entitled to take personal leave or compassionate leave under the NES is authorised to be absent and therefore not stood down and entitled to be paid.

The decision

Justice Flick held that the standing down of workers without pay serves two purposes. Firstly, it provides financial relief to an employer from paying wages in circumstances where, through no fault of the employer, it has no useful work for the employee to perform. Secondly, it protects employees from what would otherwise flow from the termination of their employment. Justice Flick found that ‘to expose the employer to a liability to pay leave entitlements after…stand[ing] down an employee would defeat’ the first purpose.

Further, Justice Flick held that personal leave, as provided for in the Fair Work Act and the relevant enterprise agreements, is a type of income protection for instances where an employee is required to be absent from work due to illness or caring responsibilities. Justice Flick stated that ‘if there is no work available to be performed by the employee, there is no income and no protection against that which has not been lost.’

As for the provisions of section 525, Justice Flick found that the reference to the employee being authorised to be absent referred to circumstances where the provisions of the Fair Work Act themselves authorise the absence, namely those provisions relating to community service leave, jury duty and public holidays and not to personal leave or compassionate leave.

Implications

As a result of this decision, it is now clear that employees across Australia are not entitled to access personal/carer’s leave or compassionate leave under the NES while stood down under section 524 of the Fair Work Act.

Employees who are stood down under JobKeeper enabling stand down amendments to the Fair Work Act (JobKeeper Provisions) are similarly affected by the decision as the JobKeeper Provisions replicate the relevant wording in section 524.

Legal advice should be sought about the relevance of this decision to employees covered by enterprise agreements as the entitlements of these employees may be affected by the terms of the applicable enterprise agreement.

Prior to handing down his judgement, Justice Flick indicated that he expected his decision to be appealed, regardless of the outcome and unsurprisingly, the TWU has indicated it is considering an appeal. However, as the law presently stands, employees on stand down under the Fair Work Act provisions are not entitled to access paid personal/carer’s or compassionate leave under the NES.

Maddocks has produced guides on legal issues raised by the coronavirus which may be of interest, and we encourage you to share these with colleagues who may also find them useful.

Need further assistance on the implications of this decision?

Contact a member of the Employment & Workplace team

Maddocks has produced guides to a range of legal issues raised by COVID-19

By Maree Skinner & Rema Hamdan & Aman Dhingra

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