In what appears to be the first published decision of the Fair Work Commission utilising its new powers to deal with JobKeeper disputes, the Commission has found against an employee who refused to take a period of annual leave when requested to do so by her employer.
Under the new JobKeeper amendments to the Fair Work Act 2009 (Cth) employers have a range of powers in respect of employees in receipt of the JobKeeper wage subsidy. These include, for example, an ability to reduce employees’ normal hours (including to nil hours – i.e. “standing them down”) and powers to request employees take periods of annual leave (so long as the employee is left with an annual leave balance of at least two weeks).
Where an employee is requested to take a period of leave:
(a) they must consider the request; and
(b) they can only refuse the request on reasonable grounds.
In Ms Leonie McCreedy v Village Roadshow Theme Parks Pty Ltd  FWC 2480 (13 May 2020) an employee applied to the Fair Work Commission to deal with a dispute as to whether her refusal to take annual leave as requested was reasonable. It should be noted that both employees and employers are able to apply to the Fair Work Commission to deal with disputes in these circumstances.
What happened in the case?
Village Roadshow is a theme park operator. Due to COVID-19 restrictions it was forced to close its parks and stood down a number of its employees (including Ms McCreedy).
Village Roadshow implemented a policy of requesting all employees with over two weeks’ accrued leave to take a certain number of days leave per week throughout the JobKeeper payment period, or until their leave balance reduced to the two-week minimum “floor”. The actual amount of days the employees were requested to take each week varied according to whether they were full-time or part-time.
We assume from the facts of the case that Village Roadshow implemented this process so that where employees were stood down and not performing any work (but still in receipt of the JobKeeper payment), they could use the JobKeeper payment to subsidise annual leave payments, whilst reducing employees’ annual leave balances, meaning that they would have less liability to pay annual leave in the future. In other words, this was a cost-saving measure.
Ms McCreedy was a part-time employee with approximately 9.3 weeks annual leave and 8.6 weeks long service leave accrued. She gave evidence that she had five holidays planned for 2020 and 2021. Some of these included holidays where flights had already been booked (such as a trip to Sydney to see the “Frozen” musical), as well as an unbooked six-week trip to meet her biological father in Holland whom she had only just discovered the existence of. Not all of this leave had been applied for or approved by her employer.
What did the Fair Work Commission decide?
In rejecting Ms McCreedy’s assertion that refusing a request to take annual leave in these circumstances was reasonable, the Fair Work Commission made clear that Ms McCreedy would still have sufficient paid leave to cover these holidays – even if her annual leave was reduced during the JobKeeper period (albeit that this would mean her annual leave would be exhausted and she would have to access long service leave).
The Commission put it this way:
“ As for Ms McCreedy’s future planned holidays in November 2020, March 2021 and mid-2021, Ms McCreedy has available to her the options of requesting leave in advance or long service leave, or the small amount of annual leave balance that she will have available to her at those relevant times. She will not be without any access to paid leave; it is simply her very strong preference that she be allowed to take paid annual leave from her balance as it exists today, or for her balance to be an amount greater than four days.“
“ I do find that Ms McCreedy has unreasonably refused [Village Roadshow’s] request. I find that her reasons for her refusal lack justification in fact or circumstance. She has had little to no regard to [Village Roadshow’s], in my view, reasonable request to relevant employees to assist in reducing [Village Roadshow’s] annual leave liabilities during a time when it is unable to operate its business for what is now, approximately 7.5 weeks, and into the short-term future. I consider that Ms McCreedy’s rejection of the request has been excessive, and disappointingly vitriolic, when regard is had to the fact that she has paid for some of the proposed holidays without first obtaining formal approval from [Village Roadshow]. If she had, her holidays would be guaranteed. It is extraordinary unfair to have her sights set on a lengthy holiday in mid-2021 to be enjoyed largely with paid annual leave, where she could still enjoy such a lengthy holiday in the event long service leave is requested and approved. Her reliance on this particular holiday in mid-2021 is set against [Village Roadshow’s] annual leave policy informing employees that leave can only be requested within 12 months.“
The Fair Work Commission also rejected Ms McCready’s arguments that her employer’s annual leave request was unreasonable given it adversely affected long-serving employees with large leave balances.
Lessons for employers
Although all such disputes will turn on their own facts, the case suggests that:
- the Fair Work Commission sees nothing wrong in employers struggling with the affect of COVID-19 (and in receipt of JobKeeper payment) using the JobKeeper provisions to save costs by reducing an employee’s annual leave balance whilst they are stood down without pay (as opposed to being required to let employees maintain their current leave balances and therefore the employer facing greater annual leave liabilities in the future);
- the fact that such policies may have a greater impact on employees with large leave balances is not of itself objectionable;
- the Commission may view as unreasonable an employee’s desire to maintain their current annual leave balance to use it for future holidays where the employee has not yet applied to take (or had approved) annual leave for those holidays;
- following on from the point above, by inference, it may well not be reasonable for an employer to require an employee to take annual leave now if it means they will not then have sufficient annual leave to cover a period of pre-approved leave;
- if an employee has sufficient annual leave and long service leave accrued to cover future periods of absence, it will be unreasonable for an employee to insist that their current annual leave balance is maintained.
Although it was not relevant to the current decision, the Fair Work Commission also stated in respect of an employee wishing to maintain their annual leave balance to use for future absence associated with a medical condition (and where they had insufficient accrued personal/carer’s leave to use for this purpose) this would be a relevant consideration in the reasonableness of an employee refusing a request to take annual leave (see paragraph 59 of the decision).
Need further help?
If you are an employee or employer involved in a dispute regarding the new JobKeeper provisions in the Fair Work Act (e.g. stand down directions, requests to take annual leave, etc), please contact EI Legal for assistance.