As part of a series of articles we are examining five employment law cases that shook the world (or at least members of the Australian HR community).
A matter that frequently causes confusion in the sphere of employment law is the interplay between notice and annual leave.
For example, if an employee is just about to start a period of two weeks annual leave and is entitled to two weeks' notice of termination, can the employer give the employee two weeks' notice so that the employment ends at the end of the period of leave? Does the employer have to wait for the period of annual leave to end, prior to the period of notice commencing?
In CEPU & Ors v Silcar Pty Ltd [2013] FWC 856 the Fair Work Commission was dealing with a situation where employees who had already been given notice of termination took a period of annual leave during the period of notice. The employer advised the employees that their annual leave would run concurrently with their notice period.
The matter became the subject of a dispute with various unions and ultimately came before the Fair Work Commission to deal with the dispute.
After reviewing the relevant authorities, Commissioner Gooley had this to say:
"[45] An employee to whom notice of termination is given prior to going on annual leave or whilst on annual leave either loses the benefit of that annual leave as she or he has to seek alternative employment whilst on annual leave or she or he loses the benefit of the notice period as her or his pre-existing annual leave plans may mean that they are not able to seek alternative work during the notice period.
[46] In my view the authorities establish the right to notice and the right to annual leave are independent and cannot be used to cancel out the other right. For example if an employer gives an employee four weeks notice of termination and after one week the employee is on approved annual leave for two weeks and returns to work out the notice for one week then the two weeks on annual leave must be absorbed by the notice period and the employee recredited with the annual leave or they must be given an additional period of notice.
[47] I therefore find that to the extent the employees annual leave ran concurrently with the notice period the employees are entitled to an additional period of notice or pay pay [sic] in lieu of notice equivalent to the period of annual leave taken during the period of notice."
It is therefore now clear that notice of termination given by an employer cannot run concurrently with a period of annual leave.
For further information please contact:
Simon Obee, Associate
Phone: +61 2 9233 5544
Email: SRO@SWAAB.COM.AU
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