Appeal Court Clears Uncertainty Around Annual Leave Payouts
In Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union  FCAFC 100, the full Federal Court has concluded that on termination of employment, employers are obliged to pay out annual leave at the rate at which the employee is paid when he or she takes annual leave (including any applicable leave loading). The appeal turned on the proper construction of s 90(2) of the Fair Work Act 2009 (Cth) which is concerned with rates of pay for accrued annual leave entitlements.
The decision arose out of a dispute over the amount of annual leave benefits to be paid to 58 retrenched employees. Centennial Northern Mining Services Pty Ltd argued that the untaken leave of the employees was to be paid at the base rate for ordinary hours worked. The court rejected this submission, clarifying that under s 90(2), if there is a modern award or enterprise agreement which provides for payment at a higher rate for annual leave that is taken, then that is the rate which is payable on termination.