​R&R leave can run concurrently with notice of termination

Cases

​R&R leave can run concurrently with notice of termination

An employer was entitled to give an employee notice of termination that ran concurrently with a period of R&R leave, a court has ruled.

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An employer was entitled to give an employee notice of termination that ran concurrently with a period of R&R leave, a court has ruled.

The payment the employer made in lieu of the required period of notice was the amount to which the applicant was entitled. In other words, no additional payment was required.

The Federal Circuit Court (Judge Smith) rejected the employee's argument that the notice period couldn't run concurrently with R&R leave. Daryl Short argued he would be deprived of his entitlement to leave if termination notice ran concurrently with his R&R leave, but this argument was rejected.

Other forms of leave, such as parental leave, long service leave and annual leave, were distinguished by the court and the impact of termination notice on those forms of leave have been treated differently in previous cases.

Background and issues


Daryl Short worked on the Gorgon Project on Barrow Island from February 2013 to December 2015. He was employed under the terms of the CBI Constructors Pty Ltd – Gorgon Project – Barrow Island Enterprise Agreement 2015. As at 30 December 2015 the applicant had worked 23 days on site and, for that reason, was entitled to 10 days' rest and recreation leave (R&R leave) under the terms of the agreement.

On 30 December 2015, the applicant’s employment was terminated by the respondent and he was paid in lieu of notice. 

The issue for determination was whether the notice period could run concurrently with the 10 days' R&R leave, or was the employer obliged to provide 10 days' notice after the R&R leave concluded.

Arguments


Mr Short argued that the notice period couldn't run concurrently with R&R leave because he would be deprived of his entitlement to leave. 

His employer, CBI Constuctors, argued that the period of R&R leave was part of the entire work cycle of the applicant. It said Mr Short was not deprived of his entitlement by reason of the R&R leave period being included in the period of notice.

Decision – for employer


The court concluded that the notice period required to be given to Mr Short was able to run concurrently with the period of R&R leave and the application was dismissed.

Reasoning of the court


The resolution of the issue was arrived at by considering the operation of s117 of the Fair Work Act in the context of the agreement. 

Section 117(2)(b) provides (in part) that an employer has to pay to an employee ‘... payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee... at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice’.

The court concluded that the authorities relied upon by the applicant did not support a universal proposition that notice of termination couldn't be given concurrently with any period of leave. In this case R&R leave was in issue.

Authorities considered


The court examined previous case law in relation to notice of termination and a concurrent period of leave – including the two cases noted below.

In McSharer v Hospital Employees Industrial Union of Workers, WA (1974) 54 WAIG 1545, Justice Burt found that the effect of the annual leave provisions in the relevant award was that the contract of service continued throughout the period of five weeks' leave. His Honour held that the right to terminate the employment on one week’s notice should be read subject to that and, for that reason, the employer could not give notice which, in its terms, would terminate the employment within the period of annual leave. 

The decision in Liquor Hospitality & Miscellaneous Union v Cuddles Management Pty Ltd (2009) 183 IR 89; [2009] FMCA 463 turned upon a construction of the relevant provisions of the Workplace Relations Act 2006 (Cth). Lucev FM found that the right of a person on maternity leave to return to the position held immediately before the start of that leave made it clear that employment could not be terminated during the term of the leave. 

Contrast annual leave with R&R leave


Justice Smith commented in relation to previous cases on annual leave and notice of termination: 

"... while they undoubtedly supported the approach taken in Cuddles, they did not dictate the outcome.

''Section 117 of the Act prohibits an employer from terminating an employee’s employment, unless written notice is given of at least the minimum notice period (in this case two weeks), or the employer has paid the employee 'at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice'.

"There is nothing in the plain text of s117 of the Act that prevents the notice period from including a period in which an applicant is not in fact working.

"... I accept the applicant’s submission that it is, in effect, the [agreement is the same] as s117 of the Act. That said, there is nothing in cl.19 which requires it to be construed so that any notice given cannot include the period of any R&R leave to which an employee is entitled under cl.31 of the Agreement."

Distinguishing R&R leave from annual leave


The court examined the nature of R&R leave:

"... the R&R leave must be taken ... and must be taken off site. 

"... Clause 21 deals with hours of work and is located in a part which otherwise deals with rostered days off, rest periods, meal breaks over time, shift work and local work provisions. In other words, it deals with the organisation of employees within the time frame during which they are actually working. 

"... unlike annual leave, R&R leave cannot be postponed and paid out upon termination... The second matter to note is that certain paid leave (RDO... and annual leave) can be taken concurrently with R&R leave... This makes any comparison to cases dealing with annual and other similar types of leave inapt.

"... It is true, as the applicant argues, that, like other types of leave, R&R leave can be taken in advance: cl.31.6(b). However, it is important to note that that entitlement is limited to Christmas. 

"This limitation upon the entitlement to take R&R leave in advance again distinguishes it from other types of leave."

Purpose of R&R leave


The court further characterised R&R leave:

"I also accept, as submitted by the applicant, that the stated purpose of requiring that the R&R leave be taken off site, is to ensure a proper period of recuperation: cl.31.3(d). 

"However, I do not accept the consequence of that purpose. The applicant argued that this period of recuperation was guaranteed as an entitlement. That entitlement would be denied upon the giving of a notice of termination during the R&R leave period.

"... The real purpose of recuperation is so that, upon any return to work, the employee can properly and safely fulfil his or her function. That is of benefit both to the employer and to the employee.

"... In other words, the respondent was entitled to give notice of termination to the applicant concurrently with the period of R&R leave, and the payment which it made in lieu of the period of notice required to be given, was in the amount to which the applicant was entitled."
 
The bottom line: R&R leave is a particular category of leave that is ‘paid non-work time’.  It can be distinguished from annual leave and other forms of leave that are actual leave away from any work responsibilities. Consequently the employer is still able to exercise the power to give an employee on R&R leave notice of termination. The effect is that a period of notice of termination and a period of R&R leave can run concurrently.

Short v CBI Constructors Pty Ltd [2017] FCCA 2442 (2 November 2017)
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