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Stood-down employees are not entitled to paid sick leave, Federal Court confirms

03 June 2020

#Workplace Relations & Safety, #COVID-19

Michael Selinger

Published by Michael Selinger, Declan Johnston

Stood-down employees are not entitled to paid sick leave, Federal Court confirms

The Federal Court has recently rejected a union claim[1] that employees of Qantas who have been stood down should receive paid personal leave.

On 18 May 2020, the national carrier’s actions in refusing to pay personal leave to stood-down employees was declared lawful by the Federal Court. The Court found the refusal to pay sick leave is consistent with the stand down provisions and complies with the statutory entitlement to personal leave contained in the Fair Work Act 2009 (Act).

Companies with stood-down workforces will be relieved as the Federal Court has ruled out what would have been an additional financial burden for employers during this period of economic distress.

Ultimately the Federal Court confirmed sick leave operates as a form of a wage protection. Without any payment of wages or performance of work during a stand down, the Federal Court determined there is no entitlement to this protection – a much-needed clarification in this COVID-19 environment.

Background

In mid-March 2020, Qantas announced its intention to stand down 30,000 employees under section 524 of the Act due to the unprecedented economic consequences of the COVID-19 pandemic.

The Communications, Electronical, Electronic Energy, Information, Postal, Pluming and Allied Services Union of Australia, the Australian Workers’ Union and the Australian Manufacturing Workers’ Union (referred together as the Unions) commenced proceedings against Qantas’ actions in the Federal Court.

The Unions sought orders confirming stood-down employees can access their paid personal/carer’s leave or compassionate leave during the stand down period.

Judgment

In rejecting the Unions’ claims, the Federal Court relied on the principal purposes of standing down employees as well as the object and purpose of leave entitlements under the Act.

Federal Court Justice Flick found the purpose of standing down employees without pay under the Act is to provide financial relief to employers. Once enlivened, these stand down provisions relieve employers from paying wages during events such as COVID-19 where employees cannot be usefully employed through no fault of the employer. Flick J found the other purpose of standing down employees is to protect employees from the consequences of terminating their services.

The Federal Court found the purpose of the paid personal leave entitlement was to operate as a form of wage protection and not a source of income.

Applying the Full Federal Court’s 2019 decision of Mondelez Australia Pty Ltd v AMWU, the Federal Court confirmed that the entitlement for paid personal leave authorises employees to be absent from work due to illness or personal responsibility whilst requiring employers to pay employees as if they had not been absent. Crucially, the Federal Court found the precondition for receiving this entitlement was that the employee was receiving an income.

Therefore employees cannot access paid personal leave during a stand down as there is no work to be performed, no entitlement to wages and therefore no reason for the wage protection achieved through paid personal leave to operate. 

The Federal Court found that requiring employers to pay leave entitlements would be contrary to the purpose of standing down employees in the first place as employers would no longer have the financial relief of lawfully standing down employees.

The Federal Court rejected the Unions’ submission that by taking personal leave employees would be authorised to be absent from their employment under section 525 of the Act. The Unions submitted Qantas could no longer rely on the stand down provisions as the employees were authorised to be absent from work and therefore the employees should receive paid sick leave. The Federal Court rejected this submission.

The Federal Court found the correct interpretation of section 525 of the Act was that employees would not be considered stood down if they were taking leave authorised at their employer’s discretion, or if the employee was absent from work due to a recognised exemption under the Act like jury service, public holidays or community service.

Furthermore, the Federal Court found that Qantas would be in breach of the Act’s prohibition on cashing out personal leave if employees were accessing paid personal leave during a stand down as there is no lawful entitlement to obtain sick leave.

The Unions sought to rely on the relevant enterprise agreements as a basis for accessing paid personal leave during a stand down. However, the Federal Court found there would be no different conclusion if the basis for standing down employees was under the Act or under the relevant enterprise agreement.

Flick J found the stand down provisions contained in the enterprise agreements did not have a different object or purpose to the stand down provisions of the Act. The Federal Court found that, without any clear language to justify a different course of action, any departure from the Act’s accessing paid leave provisions should be resisted.

Lessons for employers

The Federal Court’s decision is a helpful explanation for the operation of the Act’s stand down provisions and the obligations employers owe to stood-down employees. Whilst the lawfulness of a stand down will depend on the individual circumstances of each organisation, this judgment provides support for employers seeking to manage their operations while a stand down is in operation.

Authors: Michael Selinger & Declan Johnston

[1] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656

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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Michael Selinger

Published by Michael Selinger, Declan Johnston

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