Annual leave may be deducted on public holidays if receiving in excess of the national employment standards minimum.

Key points

• Awards and enterprise agreements operate alongside the National Employment Standards within the Fair Work Act 2009 (Cth).

• The minimum standards regarding the interaction between public holidays and annual and personal leave in the NES must be complied with. However, they do not necessarily impact on leave entitlements which exceed the minimum standards.

Full Federal Court decision provides clarification as to the interaction between the National Employment Standards’ provisions on annual leave and awards and enterprise agreements.

Background

In CFMEU v Glendell Mining Pty Limited,1 the Federal Circuit Court found that annual or personal leave taken on a public holiday could be deducted from an employee’s accrued leave entitlements if the employee has paid leave entitlements which exceed the minimum entitlements guaranteed by the Fair Work Act 2009 (Cth) (FW Act).

The Statutory Framework

Sections 87 and 96 of the National Employment Standards (NES) respectively guarantee employees a minimum entitlement of four weeks of paid annual leave and ten days of paid personal leave each year.

Sections 89 and 98 of the FW Act provide that if a public holiday falls during a period in which an employee takes paid annual or personal leave, the employee is not considered to be on paid leave for that day (i.e. the employee is entitled to be absent from work on the day of the public holiday without loss of pay, and without that day being deducted from their accrued paid annual or personal leave entitlements).

First Instance Decision

The CFMEU brought the original application on behalf of one of its members, Mr Brendan Noyes, regarding his employment with Glendell. Between 26 January 2010 and 27 January 2014, Mr Noyes took a number of periods of paid annual and personal leave which included public holidays. Glendell deducted leave from Mr Noyes’ accrued leave entitlements for days which were public holidays seven times over the four-year period. 

The CFMEU challenged these deductions on the basis that sections 89 and 98 of the FW Act provide that employees are not to have public holidays deducted from their paid leave entitlements.

Mr Noyes’ employment during the relevant time was governed by the Black Coal Mining Industry Award 2010 and two subsequent Glendell Enterprise Agreements. Under these instruments, he was entitled to six weeks of annual leave plus three weeks of personal leave.

Glendell was of the view that the relevant provisions of the FW Act regarding public holidays relied on by the CFMEU only applied in respect of the minimum NES entitlements. Since Mr Noyes received in excess of these amounts, Glendell’s position was that it was entitled to deduct the public holidays from Mr Noyes’ accrued leave entitlements.

Full Federal Court Decision

On appeal, a majority of the Full Federal Court upheld the conclusions of the trial judge, finding that as a matter of statutory construction, the FW Act only operates to protect employees’ entitlements to paid annual and personal leave under sections 87 and 96 of the NES. One of the key reasons for this finding was that sections 89 and 98 refer to entitlements to “paid annual leave” and “paid personal leave”. The definitions of these terms refer directly to the entitlements granted by sections 87 and 96 of the FW Act.

Glendell relied heavily on the terms of section 55(6) of the FW Act, which state that an employee’s entitlement to paid annual leave may derive from separate sources, and that where an employee receives an entitlement under an award or enterprise agreement, this entitlement operates in parallel with the employee’s NES entitlements. Glendell argued that the NES provides minimum standards that apply “only to the extent that an award or enterprise agreement is the same as the NES”. 

The Full Federal Court agreed with Glendell’s interpretation of the FW Act, giving weight to the legislative note contained in section 55(6) of the FW Act. The note indicates that the provisions in the NES relating to the accrual and taking of paid annual leave apply to the NES minimum period of leave, but not to the additional entitlement. While the Acts Interpretation Act 1901 (Cth) provides that legislative notes do not form part of an act, it allows the courts to look at notes as extrinsic materials for the purposes of interpretation.

The Full Federal Court found that sections 89 and 98 of the FW Act have a “limited purpose” and could not be read in the broad way that the CFMEU proposed. The result was that Glendell was held to have acted lawfully when it deducted the seven days of accrued leave from Mr Noyes.

During the proceedings, the CFMEU argued that this conclusion could cause practical difficulties in determining whether a particular period of accrued leave taken by an employee was being taken as part of the employee’s minimum NES entitlement (to which sections 89 and 98 would apply), or their additional entitlement. The Full Federal Court accepted that its preferred interpretation could lead to this problem, but it was of the view that this possibility should not control its interpretation of the FW Act. The Full Court said that it was up to employers to keep appropriate records and manage this issue to the extent that it might arise.

Bottom line for employers

• Employers with staff covered by an award or enterprise agreement may be able to deduct public holidays falling within a period of paid annual or personal leave from the employees’ accrued leave entitlements, as long as the relevant employees receive leave entitlements in excess of the NES minimums, and this is not otherwise prohibited by the relevant instrument.

• Any such deductions of leave should be monitored to ensure that employees do not receive less paid leave than their statutory minimum entitlements in any given year.

• In contrast, employers should not deduct public holidays falling within a period of paid annual or personal leave from employees’ accrued leave entitlements where the employees are only receiving the NES minimum of four weeks annual leave and ten days personal leave.

• The Glendell case demonstrates one of the advantages of negotiating an enterprise agreement — they provide an opportunity for businesses with continuous operations to exercise greater control over the management of leave entitlements and public holidays.