Australia: FIFO entitlements and termination notices: A recent decision

Following our media commentary a few months ago on the recent decision of the Full Bench of the Fair Work Commission in Kentz v CEPU [2016] FWCFB 2019 in respect of employee's Rest and Relaxation ('R&R') and termination entitlements, including on 6PR Radio, we were asked to make some written comments about the decision.

The Kentz work agreement governed entitlements of Kentz employees who were involved in the construction of the Ichthys Darwin liquid natural gas project. The Union had been expected to use Commissioner Bisset's determination to support a claim for approximately $1,000,000 of employee's unpaid entitlements prior to the decision being overturned.

The Commissioner's original ruling had the effect that employees would be entitled to be paid out for the period of their R&R in addition to payment for a termination notice period, even though the R&R period was unpaid. Resource sector employers were concerned that the decision would have 'opened the gates' for employees to claim back-pay contrary to the industry's regular practice to provide notice of termination to employees concurrently with R&R time.

Commissioner Bisset's Determination

The Union had previously argued before Commissioner Bisset that Kentz workers who were immediately retrenched on their last day of a four-week shift before commencing a week of unpaid R&R time were underpaid by one week.

Commissioner Bisset held that:

"[87] ... in providing payment in lieu of notice under the Agreement, notice cannot be given such that it runs concurrent with a period of R&R.""

Full Court Determination

The Full Bench of the Fair Work Commission quashed Commissioners Bisset's finding and held that:

"[116] ... The employee[s] would not have worked, or been paid in respect of, any R&R period which fell within the work cycle over that period of time.

[117] Further, we think the Commissioner's equation of R&R with leave overlooked one important attribute of the various forms of leave that is not shared with R&R – R&R, an employee taking one of the various forms of leave is no longer participating in the work cycle."

What does the ruling mean?

FIFO employee entitlements will be considered in light of their own agreement or instrument, many of which contain similar provisions.

The Full Bench determined that there is no general principle that a notice period cannot run concurrently with R&R time.

Employers and contractors should obtain appropriate legal advice about required notice periods and employee entitlements, specific to their circumstances to ensure parties compliance with employment contracts.

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.