The Federal Court has determined that employees cannot access paid personal leave whilst stood down.
As detailed in a previous EMA Note, section 524 of the Fair Work Act 2009 (Cth) (“FW Act”) allows an employer to “stand down an employee during a period in which the employee cannot usefully be employed because of … a stoppage of work for any cause for which the employer cannot reasonably be held responsible”.
Until a Federal Court decision on 18 May, the interaction between stand down and paid personal leave provisions of the FW Act has not been clear. Justice Flick determined that there is no legal obligation on employers to provide employees that have been lawfully stood down with access to paid personal/carer’s leave.
In reaching this judgment Justice Flick concluded that the stand down provisions within the FW Act serve two important purposes. One purpose is to provide financial relief to an employer from paying wages in circumstances where, through no fault of its own, the employer has no work that the employees can usefully perform. The other purpose is to protect the employees from what would otherwise flow from the termination of their services (if temporary stand down were not available).
In examining the interaction between section 525 regarding stand down and section 96 regarding an employee’s entitlement to access paid personal/carer's leave, Justice Flick pointed out that section 525 has two “carve outs” during which an employee will be taken not to be stood down. These are when an employee:
(a) is taking paid or unpaid leave that is authorised by the employer; or
(b) is otherwise authorised to be absent from his or her employment.
The union’s case was run on section 525(b), asserting that an employee was authorised by the FW Act to take paid personal/carer’s leave.
Justice Flick disagreed, concluding that the provisions in section 96 for entitlement to paid personal leave serve as a form of ‘income protection’. This assumes that an employee is in receipt of income. Therefore, if there is no work available and the employee has been lawfully stood down without pay, there is no income to protect. Consequently, the decision generally means that employers who have lawfully stood down employees without pay are not obligated to approve paid personal leave to an employee who is stood down.
Note that the position is likely to be different if an employer has approved a period of paid personal/carer’s leave, because under section 525(a) the employee will likely not be taken to be stood down for the period that was approved. Any employer considering the effect on personal/carer’s leave on these employees should seek specific advice beforehand.
The TWU, which was a party to the proceedings, is considering whether it will appeal the decision. As always, employers should seek specific advice on their circumstances before applying the decision to its employees.
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