There is an issue about how the Fair Work Act 2009 ('the Act') impacts upon annual leave payments on termination of employment for federal system employees.
The question has arisen as to whether the wording of section 90(2) of the Act requires the payment of the 17 ½ percent annual leave loading on termination of employment.
The Fair Work Ombudsman has taken the view that, on a literal reading of this section, annual leave loading should be paid on termination of employment. Employer groups are arguing that annual leave loading should not be payable on termination of employment as most modern awards do not require it and that this has historically been the position. Discussions are ongoing regarding the issue and the Federal Government has also become involved.
In the meantime, care should be taken when calculating final payments for annual leave. As well as having regard to the Act and any applicable modern award, consideration needs to be given to any more beneficial provisions of an employee's contract of employment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
