Leave without pay & WorkChoices

Analysis

Leave without pay & WorkChoices

The effect of leave without pay (LWOP) under WorkChoices on the accrual of entitlements such as annual leave and other conditions has changed from the pre-WorkChoices position.

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The effect of leave without pay (LWOP) under WorkChoices on the accrual of entitlements such as annual leave and other conditions has changed from the pre-WorkChoices position.

With the introduction of WorkChoices legislation, people employed by an employer who is a constitutional corporation and all private sector employers in Victoria, the ACT and Northern Territory, now have their conditions of employment regulated by the Workplace Relations Act 1996 [Cth].

The entitlement to employment conditions such as annual leave, personal/carer's (sick) leave etc. will, for many employees, be determined by WorkChoices as a guaranteed minimum under the Fair Pay and Conditions Standard, rather than the relevant pre-reform award, NAPSA or State/Territory legislation.

Provisions in WorkChoices with respect to what constitutes 'continuous service' may require the employer's payroll system to adjust leave accruals because of an employee's absence on leave without pay (LWOP).

Other forms of leave, such as long service leave, will continue to be regulated by the long service leave provision in the applicable pre-reform Federal award or agreement (where prescribed), or the relevant State/Territory long service leave statute.

Definition

In this commentary, 'leave without pay' is unpaid leave of absence from employment authorised (consented) by the employer.

It is rare for this type of leave to be prescribed in an industrial instrument and is not a general employment right for an employee under a contract of employment.

Such leave is given at the complete discretion of the employer. Leave without pay is mainly granted to a full-time employee with a reasonable length of service with the employer, for reasons such as allowing for extended travel time overseas or to allow an employee to recuperate from a long-term non-workplace-related illness when all other available leave has been exhausted.

A reference to 'leave without pay' in this commentary does not include any absence on parental leave or unpaid carer's leave.

Annual leave accrual

The accrual of annual leave under the WorkChoices Standard is subject to the definition of continuous service, which recognises certain absences from work as counting towards accrual, based on whether the absence is authorised or unauthorised by the employer, and whether the absence is paid or unpaid.

The definition of 'authorised leave' includes a period of paid leave that is authorised by the employer, however a period of authorised unpaid leave does NOT count as service for the purposes of annual leave accrual under the Standard.

Under WorkChoices, an employee's annual leave entitlement accrues in respect of the 'nominal hours worked' over each four week period of continuous service with the same employer, up to the equivalent of four weeks leave for each completed year of service. 'Nominal hours worked' means the total number of hours worked by the employee and the number of hours of paid authorised leave taken (if any) during a particular period.

The annual leave Standard does not apply to a casual employee, however a casual employee under a NAPSA or pre-reform Federal award who was entitled to annual leave prior to WorkChoices will continue to receive this entitlement.

Annual leave accrued prior to WorkChoices is subject to the 'continuity of service' provisions prescribed by the (then) applicable pre-reform award, NAPSA or State/Territory annual leave legislation.

The continuity of service provisions with respect to annual leave for an employee covered under a pre-reform certified agreement, preserved State agreement, pre-reform AWA or preserved individual State agreement are not subject to the WorkChoices Standard, but would continue to observe the relevant clause contained in the applicable pre-reform agreement.

Personal/carer's (sick) leave accrual

WorkChoices provides a guaranteed Standard with respect to personal (sick)/carer's leave. An employee is entitled to a maximum of the equivalent of two weeks of paid personal/carer's leave over a 12 month period. Personal/carer's leave includes personal sick leave and compassionate leave.

An employee accrues this leave on the basis of 1/26 of the nominal hours worked (up to a maximum of 38 per week) by the employee during that four week period.

An employee does not accrue personal/carer's leave in respect of hours above 38 hours per week. The Standard applies to all eligible employees, except casuals, although the personal/carer's leave provisions contained in a pre-reform award or NAPSA will continue to apply if the annual quantum of personal/carer's leave is more beneficial than the Standard.

The definition of 'authorised leave' includes periods of paid leave that are authorised by the employer, however it does NOT include an absence on LWOP, nor any unauthorised absence by an employee. The personal/carer's leave provisions contained in a pre-reform certified agreement, pre-reform AWA, or preserved State agreement are not subject to the WorkChoices Standard, and will continue to apply.

Public holidays entitlement

WorkChoices provides for a paid day off with respect to the list of prescribed public holidays, when the holiday falls on a day that comprises part of the employee's guaranteed hours.

On that basis, an employee would be entitled to a public holiday that falls during a period of LWOP. However, an employer, as a condition of approving an employee's application for LWOP, could alter the employee's specified weekly hours to zero for the period of the LWOP, resulting in the employee having no guaranteed hours, and subsequently no entitlement to a public holiday.

Long service leave accrual

WorkChoices does not impose any guaranteed standard with respect to long service leave, rather an employee's entitlement is subject to the relevant State/Territory long service leave statute or the long service leave provision contained in the applicable pre-reform industrial instrument (where prescribed).

It should be noted that the long service leave entitlements for employees in particular industries, such as the building and construction industry, may be covered by specific State or Territory long service leave legislation.

The following is a summary of the calculation of continuous service provisions with respect to LWOP as prescribed by the various State/Territory long service leave statutes.

Current Federal awards/agreements: Not all pre-reform Federal awards or agreements provide for long service leave and, in the absence of a long service leave provision, the relevant State/Territory long service leave legislation will apply. A common provision in a pre-reform Federal award or agreement which prescribes long service leave refers to the accrual of long service leave on the basis of the employee's 'continued employment'.

This means the employee would continue to accrue long service leave while absent on LWOP. Reference should be made to the relevant industrial instrument to establish the employee's accrual of long service leave.

New South Wales: Under the Long Service Leave Act 1955 [NSW], an employee continues to accrue long service leave while absent due to illness or injury (whether the absence is paid or unpaid), but does not accrue long service leave while absent by leave of the employer, ie leave without pay.

Victoria: Under the Long Service Leave Act 1992 [Vic], an employee does not accrue long service leave for any absence in excess of 48 weeks due to illness or injury or any other absence approved by the employer, ie leave without pay.

Queensland: Under the Industrial Relations Act 1999 [Qld], an employee does not accrue long service leave during any absence from work on leave granted by the employer, including absence due to illness or injury, unless otherwise provided by the relevant State award or agreement.

South Australia: Under the Long Service Leave Act 1987 [SA], an employee continues to accrue long service leave while absent due to sickness, whether paid or unpaid, but does not accrue long service leave while absent by leave of the employer, ie leave without pay.

Western Australia: Workers, other than in the building and construction industry, covered by a WA NAPSA or preserved State agreement gain an entitlement from either the Long Service Leave Standard Provisions which is a General Order of the Western Australian Industrial Commission or the Long Service Leave Act 1958 [WA].

Both the LSL Act and the Long Service Leave General Order provide that an employee does not accrue long service leave while absent 'by leave of the employer' or 'leave authorised by the employer', ie leave without pay.

Tasmania: Under the Long Service Leave Act 1976 [Tas], an employee continues to accrue long service leave if the absence is on account of illness or injury that has been certified necessary by a medical practitioner, however an employee does not accrue leave when absent by leave of the employer, ie leave without pay.

Northern Territory: Those employee not subject to the long service leave provisions contained in a Federal award are covered by the Long Service Leave Act [NT]. Under this legislation, an employee does not accrue long service leave while absent on unpaid leave.

Australian Capital Territory: For those workers where the relevant Federal industrial instrument does not provide for long service leave and for those workers who are award-free, the long service leave entitlements are provided by the Long Service Leave Act 1976 [ACT].

Under this legislation, an employee does not accrue long service leave during a period of unpaid leave, or where the employee is absent on account of illness or injury arising out of the course of their employment, or any absence on account of illness or injury which exceeds 14 days in any one year.

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