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% leave loading.
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 section 90.
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.
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