Upon termination, employers must continue to pay loading on
accrued annual leave (to those employees who are entitled to leave
loading), until such time as the relevant amendment has been passed
through the Senate.
Late last year, in our article entitled "2014: The Year
That Was", we mentioned the workplace relations Bills which
were at the time (and which, incidentally, are still) before the
Senate. One of those Bills addresses an issue which has long been
disputed in the IR World: the issue of whether or not annual leave
paid to employees at the end of their employment attracts annual
Early in March 2015, the Australian Federal Court determined
this issue in the affirmative - holding that annual leave owed to
workers whose employment comes to an end is to be paid out at the
same rate they would have received had they taken it whilst still
at work. What that means is that - for now - annual leave loading
on those sums should indeed be paid.
The reason we say "for now" is twofold: Firstly, given
the contentious nature of the issue and the degree of ambiguity
surrounding the interpretation of the relevant section of the
Fair Work Act 2009 (Cth) (section 90(2)), there may well
be an appeal of the Australian Federal Court's decision.
Secondly, the Fair Work Amendment Bill 2014 (which is one of
those which has stalled in the Senate) has sought to amend section
90(2) to specify that annual leave loading is not payable on
termination unless expressly provided for in an award or agreement.
(Incidentally, that proposed amendment is the result of current
Workplace Relations Minister, Senator Eric Abetz, seeking to adopt
a recommendation of the former Labour Government Fair Work Review
Until such time as the relevant amendment has passed through the
Senate, however, going forward employers
should (consistent with the Australian Federal
Court's decision) pay annual leave
loading to any employee who meets the following
is terminated (for whatever reason) or resigns from their
has an entitlement to annual leave loading (note that the
Australian Federal Court decision will have no impact in relation
to employees who are not entitled to annual leave loading,
including executives, some managers and other employees to whom an
absorption or annualised salary clause can properly apply);
has an accrued annual leave balance to be paid out on
(Centennial Northern Mining Services Pty Ltd v Construction,
Forestry, Mining and Energy Union (No 2)  FCA 136)
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.Madgwicks is a member
of Meritas, one of the world's largest law firm
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).