19 September 2019

Service Not Required to trigger an entitlement to leave and the importance of the fine print

This recent mining case again raised the often confusing issue of leave accrual in the case of absence through injury.
Australia Employment and HR
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The case of CFMMEU v North Wambo Pty Ltd t/as Peabody Energy Australia [2019] FWC 7732 has again raised the often confusing issue of leave accrual in the case of absence through injury.

In this case, a long serving mine worker sustained a non-work injury and having exhausted all paid and non-paid leave entitlements, was terminated by Peabody in January 2019. On termination he sought the reinstatement of a benefit (120 hours of paid personal leave) that the union argued was due to him under the Wambo Underground Enterprise Agreement 2018.

This is a curious case given the intersection between 'service and leave' as defined in the Fair Work Act and the impact of an Enterprise Agreement, which has the same force as an Award in the workplace. Here the former employee brought a case against Peabody for paid leave arguing that he was entitled to a credit of 120 hours personal leave under clause 21 of the Wambo Underground Enterprise Agreement 2018. For its part the CFMMEU argued that personal leave for a full-time employee becomes available on their start date and on each anniversary thereafter until termination.

Service required to obtain a benefit

In contrast Peabody argued that crediting personal leave in advance still requires an employee to perform a service under the agreement in order to gain the benefit. The novel argument used by the miner was that its personal leave arrangement could be compared with 'taking a beer from a hotel mini bar on credit, the beer is provided on trust that the person has the ability and intention to pay for it at a later time. Peabody's view was that 120 hours of personal leave was provided on credit and on trust that the employee had the ability and intention to provide the service for the personal leave at a later time.

What is 'credit'?

Deputy President Saunders in finding for the union, said the case required the interpretation of the word 'credit' in clause 21.1 of the agreement, as the characterisation of the 'credit' as an entitlement was significant, given that 'the ordinary meaning of an 'entitlement' is that to which one is entitled, as part of a contract, employment arrangement etc

According to the DP:

"This suggests that the 120 hours of personal leave 'credited' to the full-time employee is at the employee's disposal on the day they commence their employment or on the day of their anniversary of commencement unconditional, rather than obtained on trust that they will provide 12 months service to the employer"

Of keen interest was that clause 21 did not contain any references to a requirement to provide a particular or any period of service.

In making his decision the DP contrasts this clause to others in the agreement which expressly required the performance of a particular period of service in order to qualify for the relevant entitlement.

The absence of an express term in relation to service in clause 21, saw the DP find for the union assuming the employee has sufficient leave credits, then they have the right to be paid when they take it.

Lessons for employers

It is intriguing that this matter was ever in dispute, as one ought to assume that before signing on to the agreement Peabody would have understood the meaning of every sentence in the document. The fact that it got this far shows that either the employer did not put sufficient resources into the negotiation, or at some point chose to let those resources leave the business.

The aim of enterprise bargaining is to be a value add to a business. If employers do not invest in the process and maintain the expertise, decisions like this will come back to haunt them.

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.

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