The Full Bench of the Supreme Court, in a majority judgment, in Flinders Ports Pty Ltd v Woolford  SASCFC 6 has clarified what it means to be on “unpaid leave”.
This decision involved an employee who was employed as a casual worker to perform mooring, deckhand and maintenance duties in Port Lincoln Harbour. He was employed on a series of contracts from 16 October 1990 until 10 October 2008, when he ceased work due to a work-related injury. During this time the employee worked varying hours, shifts and duties depending on the work that was available. For differing reasons, both Kourakis CJ and Stanley J found that the worker had been continuously employed by Flinders Ports Pty Ltd until his employment was formally terminated on 23 September 2011.
Section 3 of the Long Service Leave Act 1987 (SA) (‘the LSL Act’) states that where an employee is employed on a casual basis, the weekly rate of payment for the purposes of long service leave will be calculated by reference to the average number of hours an employee worked during the three years preceding when the entitlement to long service leave arises.
At issue was whether the period that the employee was away from work as a result of his work-related injury (and in receipt of weekly payments pursuant to the Workers Rehabilitation and Compensation Act 1986 (SA)) should be disregarded for the purposes of calculating the employees long service leave entitlement pursuant to section 3(4)(b) of the LSL Act, as “unpaid leave”.
Stanley J and Kelly J (Kourakis CJ dissenting) found that “Leave is an entitlement relieving the employee from the performance of work duties, which is conferred by the terms of the employment contract, an industrial instrument or Act of Parliament that applies to that employment. Usually such leave is paid. Leave can also be granted to an employee by an employer as an indulgence. The employee is relieved from the performance of work outside of any contractual or statutory context.”
Although this decision concerned circumstances in which an employee was away from work as a consequence of a work-related injury, it potentially has much broader application to any employee who is employed as a part-time or casual employee, or paid on a performance basis.
Simply because an employee is not at work, they will not be taken to be on unpaid leave. In order to be on unpaid leave an employee will need to be able to establish that they are using an industrial entitlement or that the employer has in some way positively condoned the employee taking a period of unpaid leave.
If you have an employee(s) who has been absent from work for a period of time without authorisation from the employer (and not on paid leave), you should seek advice as to how this decision might affect you.
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.