Five employ­ment law cas­es that shook the world: #1 Can notice and annu­al leave run together? 

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.