Australia: Public holidays and payment of notice – separating lore and the law

Mere days before the Easter long weekend, the Full Bench of the Federal Court handed down a judgment that sparked a flurry of urgent requests from employers for legal advice.

The decision of Construction, Forestry, Maritime, Mining and Energy Union v OS MCAP Pty Ltd (CFMMEU v OS MCAP),¹ concerned the interpretation of section 114 under the National Employment Standards (NES) set out in the Fair Work Act 2009 (Cth) (FW Act). Specifically, the Court considered the meaning of a "request" to work on a public holiday. The Full Bench clarified that an employer must request an employee to work on a public holiday in a way that the employee has a choice, and only require the employee to work if it is reasonable and refusing to work is unreasonable.

In addition, last year the Federal Court heard an appeal in a claim for general protections involving dismissal, Southern Migrant and Refugee Centre Inc v Shum (No 3) (SMRC v Shum),² where the appeal decision included a surprising interpretation of the requirement for notice of termination or payment in lieu under the NES.

Both decisions highlighted a common phenomenon in employment and industrial relations - where employers confuse the 'lore' of long held business practice with what the Courts have actually set down as the law.

In this article we explore these decisions, separating the lore from law.

CFMMEU v OS MCAP

In April this year, the Full Bench heard an appeal by the CFMMEU of a decision that an employer, OS MCAP Pty Ltd, had not contravened the NES (section 114 of the FW Act) by requiring employees to work on a public holiday.

The original application by the CFMMEU came about when the employer required roughly 85 employees to work a standard 12.5-hour shift at the Daunia Mine in central Queensland on Christmas Day and Boxing Day in 2019. The CFMMEU argued that this contravened section 114(1) of the FW Act, which gives employees the protection to not be required to work on a public holiday, even though section 114(2) permits an employer to request an employee to work on a public holiday. This meant that the core issue in both decisions was how far this protection to employees extended, and what an employer "request" actually meant.

On appeal the Full Bench identified that there were a "number of provisions in which the legislature intentionally chose to describe, in the context of other NES, whether a request or a requirement was required", which undermined OS MCAP's argument that it was intended that a reference to a "request" would mean the same thing as "require". It followed that a "request" under section 114 held an ordinary literal meaning and included a right for an employee to be absent on a public holiday. In summary, the Full Bench decided that "an employer may make a request of employees in the form of a question, leaving the employee with a choice as to whether he or she will agree or refuse to work on the public holiday. Ultimately.the employer may require an employee to work on a public holiday if the request is reasonable and the employee's refusal is unreasonable",³ taking into account the criteria in section 114(4).

SMRC v Shum

In SMRC v Shum, the Applicant, Ms Shum, was a "Team Leader, Finance" who was made redundant on 19 June 2017. In the correspondence terminating her employment, Ms Shum was notified that she would receive payment in lieu of notice the next week, which she then promptly received four days later, on 23 June 2017.

Ms Shum brought a claim alleging, among other things, that adverse action was taken against her in contravention of the FW Act. The Federal Circuit Court first found that Ms Shum's employment was terminated in breach of the general protections under the FW Act, and otherwise dismissed the claim.

SMRC then brought an appeal against this entire decision. Ms Shum herself brought a cross-appeal for the other aspects of her claim which had been dismissed, which included an argument that her termination payment had been paid late and in contravention of section 117 of the NES. On appeal, the Federal Court decided that the first decision was incorrect, and that SMRC's appeal should succeed, with the matter remitted back to the Federal Circuit Court.

Relevantly, Ms Shum's cross appeal was also dismissed - with the exception of one crucial aspect regarding the requirements of section 117 of the FW Act. The Court found that under section 117(2)(b) of the FW Act, "as a precondition to lawful dismissal, an employer must first make any payment in lieu of notice to an employee whose employment is terminated".⁴ This meant that as SMRC had paid Ms Shum in lieu of notice after the date of termination, this amounted to a contravention of the FW Act.

What does this all mean?

First, the decision in CFMMEU v OS MCAP does not actually change the law, nor does it mean that employers cannot roster staff on public holidays. But it does correct the 'lore' about employee rights to be absent on a public holiday, and employer rights to request that they work on a public holiday.

Thankfully, in response to the arguments of OS MCAP that this would be "inherently unworkable", the Full Bench explained that an employer is still able to have a roster which includes public holidays.⁵ The Full Bench reasoned that an employer just needs to ensure that, either a request is made of the employees prior to a final roster being circulated, or, when a roster including public holidays is circulated, the employees understand that this roster is in a draft form, and that those employees who have been allocated to the public holiday then indicate whether they accept or refuse this roster. The Full Bench even went as far to suggest that employment contracts could contain provisions that the employees may be asked to work on public holidays, and may be required to work these public holidays where the request is reasonable and their refusal would be unreasonable.

What this means is that employers may not actually need to urgently revisit their business practices in respect of public holiday rostering. However, they do need to be aware of this decision, and future developments in this space to continue to ensure that they are making lawful demands of their employees. Ultimately, if there is any uncertainty over the lawfulness of current rostering practices, it is best to seek our advice, to reduce the risk of future disputes or contraventions of the NES.

In comparison, the decision of SRMC v Shum appears to require employers to abandon common practice, and perhaps defy commonsense, or otherwise face pecuniary penalties for breach of the NES. As many employers would be aware, employees have their employment terminated all the time, and any payments lawfully due are not made immediately, but within the operating pay cycle of a business. Even when negotiating a separation or exit for an employee, the standard terms of a deed usually allow for payments to be made within a 7, 14, 21 or even 28-day period to accommodate these existing pay cycles. By adjusting standard business practices in accordance with this decision, this may even open an organisation up to further risks; retaining an employee longer than intended or advisable while waiting for a payment to be able to be processed.

In the end, this single instance decision was decided on its own facts, and the interpretation of section 117 remains open in future decisions.

Where there is uncertainty in your business practices, it is always prudent to seek specialist advice to help separate 'lore' from law.

Footnotes

¹ [2023] FCAFC 51.

² [2022] FCA 481.

³ See [5], [37]- [47].

⁴ At [192].

⁵ At [44].

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.