What if you recall an employee from annual leave?

Q&A

What if you recall an employee from annual leave?

How should you compensate an employee who is recalled from annual leave to perform work? Paul Munro explains.

How should we compensate an employee who was recalled from annual leave to perform work?

This question was recently sent to our Ask an Expert service.
 
Q Our company recently recalled an employee from annual leave for one day to perform emergency work on a vital piece of plant equipment. Fortunately, the employee agreed and was able to repair the damaged equipment. He has enquired about payment for the day and whether it will affect his annual leave balance.

The company intends to re-credit the employee one day’s annual leave and pay the employee’s ordinary pay for the time actually worked. Is this the correct remedy in this circumstance or is the employee entitled to some other payment, such as overtime? Also, could he have refused to come to work?
 
A An employee is under no obligation to accede to an employer’s request to perform work during a period of annual leave, nor does the employer have a unilateral right to direct an employee to return to work when they are absent on annual leave.

The Fair Work Act (s88(1)) provides that paid annual leave may be taken for a period agreed between the employee and his or her employer.
 
If an employee agrees to work during a period of annual leave, the employer must re-credit the equivalent amount of annual leave for the time worked by the employee, in addition to payment for the time actually worked by the employee. Alternatively, the employee and employer may agree to extend the period of annual leave by the equivalent amount of time worked by the employee.

An employee cannot be paid an amount in lieu of taking annual leave (cashing out) unless provided under the applicable modern award or enterprise agreement, or the employee is award/agreement free. 

National Employment Standards

The standard with respect to annual leave only contemplates three scenarios:
  • the employee taking a period of paid annual leave as requested by the employee
  • the 'cashing out' of annual leave where permitted under the applicable modern award or enterprise agreement, or an award/agreement free employee, or
  • payment in lieu of annual leave upon termination of the employee’s employment.

Adverse action

An employer should be careful there are no repercussions as a consequence of an employee’s refusal to work during a period of annual leave. The Fair Work Act prohibits an employer from taking adverse action against an employee because of an employee exercising a workplace right (the right to take annual leave).

Adverse action includes the following:
  • dismissing the employee
  • injuring the employee in his or her employment or altering the position of the employee to his or her prejudice
  • discriminating between the employee and another employee

Claim for overtime

There would be an entitlement to payment of overtime only where the work performed during the recall was outside the employee’s ordinary starting or finishing time, outside the span of ordinary hours prescribed by the applicable modern award or enterprise agreement, or in accordance with the terms of the employee’s contract of employment. 

Working for another employer during  annual leave

While the National Employment Standards require an employee to be absent from work during a period of annual leave, it does not prevent an employee working for another employer during annual leave.

Provided the work performed with the second employer does not conflict with the business interests of the first employer, an employee is free to work for another employer while on a period of annual leave. The National Employment Standards does not imply any control by the first employer over the activities of an employee while on annual leave.
 
The bottom line: An employee is under no legal obligation to accede to an employer’s request to perform work during a period of annual leave, nor does the employer have a unilateral right to recall an employee from annual leave. However, if employees agree, they must be re-credited the equivalent amount of annual leave for the period worked or, alternatively, the period of annual leave may be extended by the equivalent amount of time worked by the employee during the period of annual leave.
 

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