The South Australian Industrial Relations Court has recently re-affirmed that notice periods for termination of employment contracts cannot run concurrently with periods of approved leave.

Implications for employers

This decision confirms the established principle that employers cannot deprive an employee of their right to paid leave by including it in a period of notice for termination. Accordingly, employers should:

  • be aware of any approved leave that may fall within the period of notice of termination of employment; and
  • either extend notice by the amount of leave to be taken in the period, or ensure that the leave is re-credited and paid out at the end of the notice period.

Employers should also ensure that employees are given sufficient notice of a requirement to take leave over a period of shut-down, such as the Christmas and New Year period in accordance with any contract, policy or applicable industrial instrument. If notice is not specified then ‘reasonable’ notice should be given (as a broad guideline, we would suggest at least a month).

Background

This decision arose from a claim by the employee applicant for unpaid annual leave in circumstances where the employee’s notice period coincided with a period of authorised leave over the 2011 Christmas period.

On 15 December 2011, the employee had received an email from his employer, Richards Mining Services Pty Ltd, advising of the closure of the Adelaide branch over Christmas, and requiring employees to take annual leave for non-working days between 22 December 2011 and 9 January 2012 (8 days).

However, on 16 December 2011 the respondent notified the employee that his employment was to be terminated due to redundancy. The employee was given 4 weeks’ notice under his contract and told that his last working day would be 13 January 2012. The employee subsequently agreed to undertake an additional week of work, up to 20 January 2012, but then refused a further offer of work.

The employee claimed that he was entitled to be paid for the period of annual leave that coincided with his notice period. In other words, rather than being paid the 8 days as annual leave and having his leave balance reduced, the 8 days should have been paid as notice leaving his leave balance intact.

The employer denied liability on the basis that the employee was offered additional work, which he refused. In other words, there was an attempt to extend the notice period by providing further work.

Decision

The Court found in favour of the employee and ordered that he be paid a sum equivalent to the period of annual leave (8 days), plus interest and superannuation contributions.

In upholding the employee’s application, the Court noted that:

  • it is an established principle that notice cannot run at the same time as a period of approved leave because it has the effect of depriving the employee of their right to paid leave;
  • the additional work undertaken by the employee did not amount to a withdrawal of notice, as notice having been given could not be withdrawn unilaterally. Rather, it can only be withdrawn with the consent of both parties; and
  • a period of 5 working days’ notice to employees of the requirement to take annual leave did not appear to be reasonable, although this was not in issue in this case.