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Payment of leave loading upon termination questioned

Friday, May 18, 2012
Commissioner Peter Hampton of Fair Work Australia (‘FWA’) has approved an enterprise agreement that does not provide for the payment of leave loading upon termination. This decision is noteworthy as the Fair Work Ombudsman has previously specified that annual leave loading is payable in these circumstances.

The issue before FWA concerned whether the exclusion of annual leave loading in termination payments were a contravention of s 55 of the Fair Work Act 2009 (Cth) (‘the Act’).

s 55 stipulates that no award or enterprise agreement can exclude the National Employment Standards (‘NES’). The NES constitute ten minimum criteria, such as maximum weekly hours and parental leave, which must be provided to every employee.

Commissioner Hampton analysed the NES alongside s 90(2) of the Act, which states that a terminated employee with a remaining period of untaken annual leave must be paid the same as they would have been entitled to had they taken that leave during employment. Commissioner Hampton approved the agreement, finding that the NES did not contain an express provision requiring the payment of annual leave loading upon termination. However, as Commissioner Hampton felt that he had not “decisively” settled the matter, the issue was not “comprehensively resolved”. In his judgment, Commissioner Hampton noted that the decision to approve the agreement was complicated by the failure of the relevant unions to provide submissions on the leave issue.

For advice or assistance with drafting enterprise agreements contact Nick Stevens or Liza Isho

Author: Nick Stevens, Principal, Stevens & Associates Lawyers, an AIIA.biz expert and one of the Panel of Expert Bloggers.

This article provides general information only. It is not legal advice, and is not a substitute for legal advice. Specific advice should be sought to take into account your particular circumstances. Stevens & Associates Lawyers is a boutique industrial relations and employment law firm. It has liability limited by a scheme approved under Professional Standards Legislation.

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