In the matter of Ryan v Whitehaven Coal Mining Pty Ltd
(Unreported, 26 June 2013) the NSW Local Court has provided a clear
interpretation on section 90(2) of the Fair Work Act 2009
(Cth). Dealing with paying out unused annual leave on termination
of employment the Local Court has confirmed that any entitlement to
leave loading is payable on termination.
Mr Ryan was an employee of Whitehaven Coal Mining Pty Ltd
(the Company) who had a number of unused annual
leave days accrued at the date of his resignation from the Company.
Mr Ryan's annual leave entitlements were governed by the
Whitehaven Opencut Operations (Tarrawonga) Enterprise Agreement
(the EA) which provided that employees were
entitled to an annual leave loading of 20%. The EA was silent as to
what the employee was to be paid should employment be terminated
while the employee had unused accrued annual leave.
Mr Ryan and the Company were in dispute regarding the effect of
section 90(2) of the FW Act. Section 90 states:
If, in accordance with this Division, an employee takes a
period of paid annual leave, the employer must pay the employee at
the employee's base rate of pay for the employee's ordinary
hours of work in the period.
If, when the employment of an employee ends, the employee
has a period of untaken paid annual leave, the employer must pay
the employee the amount that would have been payable to the
employee had the employee taken that period of leave.
The Company argued that the proper construction of section 90(2)
meant that Mr Ryan was only entitled to his base rate of pay for
his unused annual leave. The CFMEU on behalf of Mr Ryan argued he
was entitled to be paid whatever amount he would have been paid if
he had taken the leave during his employment, including the 20%
Magistrate Buscombe agreed with the submissions made on behalf
of Mr Ryan and noted that this reading of section 90, was in
accordance with the ordinary meaning of the words used in the
legislation, the purpose of the FW Act and the statutory context of
Magistrate Buscombe noted that if what the legislature had
intended was that unused annual leave was to be paid at an
employee's base rate it would have been very easy for the
statute to say just that.
Emphasis was placed on the fact the National Employment
Standards are minimum standards that cannot be displaced with any
provision detrimental to an employee, however enterprise agreements
can include terms ancillary to the NES entitlements, so far as the
effect is not detrimental to the employee in any respect (see
section 55(4) of the FW Act).
Magistrate Buscombe made the point that if the employer's
interpretation were to be adopted this would render s90(2) to mean
"the employer must pay the amount calculated on the base rate
of pay", which would be to ignore the words used and "in
effect to completely rewrite" the section.
Mr Ryan was awarded $2,376.00.
Going forward it is clear that any employee entitled to leave
loading, whether by Modern Award, Enterprise Agreement or
employment contract, will be entitled to this loading when being
paid out annual leave on termination 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.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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