Can annual leave form part of termination notice?


Can annual leave form part of termination notice?

Can annual leave form part of a redundant employee's notice of termination period?


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Can annual leave form part of an employee's notice of termination period?

This question was recently sent to our Ask an Expert service.

Q A week before Christmas, the company decided several positions would be redundant in a particular area of our operations. The affected employees were advised accordingly and given five weeks notice of termination of employment. The company has an annual close down from Christmas Eve and returned to work on 12 January. We advised the employees their annual leave would run concurrently with the notice period.

One employee has been advised by their union that annual leave cannot form part of the period of notice of termination. Neither the Fair Work Act (FWAct) or the applicable modern award (Manufacturing and Associated Industries and Occupations Award 2010) appear to provide for this circumstance. Can a period of annual leave form part of the employee’s period of notice of termination?
A Where an employer gives notice of termination to an employee, generally, the answer is no. Industrial courts and tribunals have usually determined these are separate entitlements and provided for different reasons. Notice is provided to an employee to enable him or her to seek alternative work whilst still working. The Manufacturing Award (cl 22.3) specifically provides for employees to have time off (job search entitlement) during the period of notice to look for work. An employee given notice prior to taking annual leave or while on annual leave would be denied this opportunity.
Meanwhile, annual leave is provided to employees to enable them to have a break from work. Therefore, it has generally been determined that the right to notice and the right to annual leave are independent and cannot be used to cancel each other out. 


It is advisable that the company absorbs the annual leave into the period of notice and the employees are re-credited the annual leave or, alternatively, are given an additional period of notice. 

Resignation by employee

While there are established principles relating to the circumstance when an employer gives notice of termination to an employee, these principles may not necessarily apply where an employee resigns their employment and requests to take annual leave during the notice period.

It would seem that annual leave could form part of the period of notice in that circumstance, although the employer could reasonably refuse a request to take annual leave due to operational requirements, as the requirement for the employee to give the appropriate period of notice is to allow the employer sufficient time to fill the position.

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