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Overseas employment found not to count towards long service leave

01 September 2021

#Workplace Relations & Safety

Published by:

Jamie Kim, Olivia Lawrence

Overseas employment found not to count towards long service leave

In the recent decision of Infosys Technologies Limited v State of Victoria [2021] VSCA 219 (Infosys v Victoria), the Victorian Court of Appeal found that Infosys Technologies Limited (Infosys Technologies) was not required to pay long service leave entitlements to two employees who completed the first part of their employment overseas. This case is significant as it considers how long service leave entitlements under the Long Service Leave Act 2018 (Vic) (LSL Act) will operate in relation to employment that partially occurred outside of Victoria. Importantly, the Court of Appeal looked at how ‘continuous employment’ under the LSL Act should be interpreted.

Although each state and territory has a different long service leave scheme, ‘continuous employment’ is a common threshold for long service leave across Australia. As such, other states may find this Victorian decision influential when determining what constitutes ‘continuous employment’.

Background

Infosys Technologies is a company incorporated in India and registered in Australia as a foreign company under the Corporations Act 2001 (Cth). Infosys Technologies India often deploys its employees overseas, including to Australia. The two employees, Ms Thankappan and Ms Anbalagan, were deployed to Victoria after a long period of service in India.

Ms Thankappan worked for Infosys Technologies for over nine years. She completed most of her employment in India, with a short period in the United Kingdom. For the past two years, two months and five days, Ms Thankappan worked in the Victorian office.

Ms Anbalagan worked for Infosys Technologies for over 12 years and also completed most of her employment in India before commencing work in Victoria. Ms Anbalagan worked in Victoria for the past two years, seven months and 26 days of her employment.

When Ms Thankappan’s and Ms Anbalagan’s employment ceased, they made a complaint to the Wage Inspectorate Victoria that they did not receive their long service leave entitlements. As a result, the Wage Inspectorate Victoria ordered Infosys Technologies to pay long service leave entitlements to the employees based on their entire service with Infosys Technologies.

Infosys Technologies appealed this decision claiming that the employees’ service in India does not constitute ‘continuous service’ under the LSL Act.

Decision

The issue before the Court of Appeal was whether Ms Thankappan’s and Ms Anbalagan’s employment in India before they commenced work in Victoria was included as part of their ‘continuous employment’ under the LSL Act. The Court of Appeal ultimately found that their service overseas was not included.

This decision was one of statutory construction of section 6 of the LSL Act:

“At any time after completing 7 years of continuous employment with one employer, an employee is entitled to an amount of long service leave on ordinary pay equal to 1/60th of the employee's total period of continuous employment less any period of long service leave taken during that period.”

The interpretation of ‘continuous employment’ was guided by section 48(b) of the Interpretation of Legislation Act 1984 (Vic), which provides that “in the absence of a contrary intention, the subject matter of legislation has a territorial connection regardless of the generality of the language used.” As such, the Court of Appeal found that despite the general language used in section 6 of the LSL Act, ‘continuous employment’ means employment ‘in and of’ Victoria and the employment of an employee must have some form of “territorial connection” to Victoria.

The Court went on to say that to accrue long service leave, an employee’s employment must have a “close identification between continuous employment and Victoria”. In this case, the Court found that the employees’ employment in India had no connection with Victoria, and therefore did not form part of their ‘continuous employment’ under the LSL Act. As such, Infosys Technologies was not obliged to pay any long service leave entitlements as the employees did not meet seven years of continuous employment at the time of termination, in accordance with section 6 of the LSL Act.

The Court of Appeal also considered that if the two employees’ employment in India (of more than seven years) were considered ‘continuous employment’, it would lead to an “absurd outcome” as they would have been entitled to request for long service leave entitlements as soon as they arrived and commenced work in Victoria.

The Court did not proceed to give an exhaustive list of what constitutes a “close identification between continuous employment and Victoria”. However, one example that the Court of Appeal gave was that, for an employee employed by a Victorian company who is seconded out of the state, the period of the secondment would not be a break in ‘continuous employment’, so long as they maintained a sufficient connection with Victoria.

Legal position before Infosys v Victoria

It is widely accepted that an employee’s overseas service could count towards long service leave entitlements under the LSL Act. Prior to the Court of Appeal's decision in Infosys v Victoria, the test has been whether the entire period of service of an employee (including service outside Victoria) has a substantial connection with Victoria, as per the decision in Cummins South Pacific Pty Ltd v Keenan  [2020] FCAFC 204 (Cummins v Keenan).

In Cummins v Keenan, an employee who provided service in the United Kingdom for 14 years before commencing work in Victoria was awarded long service leave for the entire period, including the 14 years, as it was found that the employee’s entire period of service had a substantial connection to Victoria. In coming to this decision, the Full Federal Court first defined continuous employment as a single continuous period of employment with one employer and then considered whether that period was sufficiently connected to Victoria.

The Court of Appeal rejected this position and disagreed with the Full Federal Court’s decision, stating that the Full Federal Court had made an incorrect conclusion that “construing ‘continuous employment’ in light of s 48(b) of the [Interpretation of Legislation Act 1984 (Vic)] would require the entirety of an employee’s service to be worked in Victoria”. Instead, the Court of Appeal found that long service leave entitlements will arise whenever continuous employment is ‘in and of’ Victoria. Therefore, a period of ‘continuous employment’ will always have the necessary connection with Victoria.

The Court of Appeal also distinguished Infosys v Victoria with two NSW authorities, Australian Timken Pty Ltd v Stone (No 2) [1971] AR (NSW) 246 and International Computers (Australia) Pty Ltd v Weaving [1981] 2 NSWLR 64, on the basis that the text of section 4(1) of the Long Service Act NSW 1955 (NSW) differs from section 6 of the LSL Act.

Takeaways for employers

This case is important as it clarifies the correct method of determining what constitutes ‘continuous employment’ under the LSL Act. It is worth noting that the two employees, in this case, had no connection with Victoria when they commenced their employment in India. This can be distinguished with the circumstances where an employee of a Victorian company is seconded out of Victoria, in which case there may well be a close identification with Victoria and, therefore, continuous employment.

The current Australian employment context is one shaped by COVID-19. Among other things, COVID-19 has meant that many overseas workers have returned home to Australia or workers are based overseas as they work remotely in respect of Australian employers. Given this context, the decision of Infosys v Victoria could be significant to Victorian employers with employees in this situation.

Victorian employers should carefully consider whether any overseas or out-of-state periods will constitute a break in ‘continuous employment’ due to insufficient connection with Victoria.

If you have any questions about employees working overseas or other employment law concerns, please contact us.

Authors: Stephen Trew, Jamie Kim & Olivia Lawrence

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Jamie Kim, Olivia Lawrence

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