What you need to know
- The Federal Court of Australia has confirmed that where an employee has been lawfully stood down, the employee is not entitled to access paid personal/carer's leave or compassionate leave during the period of the stand down.
What you need to do
- A number of organisations have grappled with the question of whether employees are entitled to access paid personal/carer's leave when they have been stood down.
- This is an important decision that clarifies the operation of s 525 of the Fair Work Act 2009. It has relevance for employees who have been stood down under s 524, an applicable enterprise agreement and will also extend to jobkeeper enabling stand down directions.
Background to Federal Court proceedings
In mid-March 2020, Qantas announced an intention to stand down approximately two-thirds of its 30,000 employees.
Two separate proceedings were commenced in the Federal Court of Australia by unions seeking declarations that employees who were stood down were entitled to access paid personal/carer's leave or compassionate leave during that stand down. Both proceedings were heard together before Flick J.
It was common ground in the proceedings that the employees had been lawfully stood down under either section 524 of the Fair Work Act 2009 (Cth) or under relevant provisions of the applicable enterprise agreement.
Object and purpose of stand down
Justice Flick first considered the object and purpose of the right of an employer to stand down employees who are otherwise ready and willing to perform their contractual services.
His Honour concluded that a stand down serves two important purposes:
- 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 employees can usefully perform; and
- to protect the employees from what would otherwise flow from the termination of their services.
Citing with approval the decision of Morling J in Townsend v General Motors-Holden's Ltd (1983) 4 IR 348, Flick J also confirmed that, in resolving the question of whether an employee "cannot usefully be employed" for the purpose of section 524 of the FW Act, regard may be had to the economic consequences to the employer.
Object and purpose of personal/carer's leave
Justice Flick's decision turned on his Honour's characterisation of the object and purpose of paid personal/carer's leave.
Citing the decision in Mondelez v Australian Manufacturing Workers Union (2019) 289 IR 29 (see our Employment Alert here), Flick J confirmed that the entitlement to personal leave is "a form of income protection". His Honour noted that this characterisation "presupposes that an employee is in receipt of income". His Honour also determined that the entitlement to access personal/carer's leave or compassionate leave is "an entitlement on the part of the employee to take leave from otherwise performing the work they are required to perform".
Justice Flick concluded that to enable an employee to access paid personal/carer's leave or compassionate leave while lawfully stood down "would go against the very object and purpose of conferring those entitlements". That is, during the period of the stand down:
- the employee does not need to be relieved from work, given there is no work to perform; and
- the employee is accordingly not in receipt of income and so does not require any "income protection".
His Honour also observed that enabling an employee to access those entitlements when stood down would defeat one of the two purposes of stand down – being to protect the employer against liability to pay such leave entitlements after lawfully standing down employees.
Section 525 of the FW Act – leave vs authorised absence
Section 525 of the FW Act provides that an employee is not taken to be stood down under section 524 of the FW Act when the employee:
- is taking paid or unpaid leave that is authorised by the employer (section 525(a)); or
- is otherwise authorised to be absent from his or her employment (section 525(b)).
The unions submitted that the entitlement to personal/carer's leave was an "authorised absence" for the purposes of section 525(b) of the FW Act.
Justice Flick rejected that submission. His Honour found that:
- section 525(a) applies to circumstances where the employer has authorised an employee to take paid or unpaid leave; and
- properly construed, section 525(b) is not directed to the taking of leave, but rather directed to those circumstances in which the provisions of the FW Act authorise or entitle the employee to be absent from work. Examples of these types of provisions include those relating to eligible community service activity, jury service and public holidays.
His Honour concluded that an employee who has been stood down and who seeks to take personal/carer's leave or compassionate leave is not "authorised to be absent from his or her employment" for the purposes of section 525(b) of the FW Act.
Stand down under an enterprise agreement
Justice Flick found that no different conclusion should be reached when stand down was considered under the relevant enterprise agreements rather than the FW Act.
After reviewing the relevant provisions of those enterprise agreements, his Honour found that the objects and purposes of the stand down provisions contained in the FW Act, and the objects and purposes of the relevant leave entitlements, were equally applicable to an understanding of the enterprise agreements. His Honour observed that, in the absence of clear language in an enterprise agreement, "a departure from that provided for in the Fair Work Act should be resisted".
It is possible that the unions will seek to appeal the decision.
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656
Authors: Kathy Srdanovic, Partner and Jessica Tuffin, Senior Associate
