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Notice of termination during R&R not OK, says FWC

The Fair Work Commission (FWC) has ruled on whether notice of termination can run concurrently with a period of rest and recreation (R&R) provided for in an enterprise agreement covering fly-in, fly-out employees on a resources construction project.

The background

IN this decision handed down on 3 February 2016, FWC Commissioner Bissett considered a dispute brought by communications union the CEPU against Kentz (Australia) Pty Ltd in relation to an Ichthys onshore construction greenfields agreement.

The agreement ran from February 2013 to February 2017 and provided for notice of termination ranging from one to four weeks depending on years of service and employee age.

The agreement also provided for periods of R&R, classified as authorised non-work time.

At the hearing, Commissioner Bissett noted that prior to the CEPU notifying a dispute, Kentz had been ‘gradually demobilising its workforce as the work required to be done by it on the project as contracted came to an end’.

At the time of the dispute, six employees were still covered by the agreement. They had been given written notice of termination, with their employment due to end on 6 February 2016, and were working out their notice period.

Can notice run concurrent with R&R?

The question for the commissioner was whether it was permissible for a period of notice to run concurrently with a period of R&R.

The CEPU argued the employer could not give notice concurrent with other forms of leave. Where an employee had an entitlement to be absent from work, that absence could not be offset by notice because to do so would undermine the requirement for notice in the first place, the union argued.

The union said R&R was not dissimilar to recreation leave. It was therefore not allowable that a period of notice run concurrent with a period of approved leave.

“As R&R is an entitlement, it cannot be offset against other entitlements such as notice of termination,” the union said.

Kentz argued that R&R was different to other types of leave as it was a ‘creature of the parties’ agreement’ and not a creature of statute like annual leave.

Statutory requirements

According to Commissioner Bissett, under s117(2)(b) of the Fair Work Act 2009, the amount paid in lieu of notice must be what the employee would have received had they continued to work.

“This enlivens the question as to what an employee of Kentz would have been entitled to had they worked out the notice period,” the commissioner said.

“It seems to me that leave, generally, is no more than a period of time an employee can be absent from the workplace without risk to the security of his or her employment.”

She also did not see R&R as the same as weekends.

R&R was a form of regulated and approved leave. Having come to that conclusion, notice of termination could therefore not run concurrent with a period of leave. Similarly, pay in lieu of notice, where employees did not work out their notice, could not assume an employee would have been on unpaid leave for part of the notice period and reduce the amount of payment in lieu of notice if they were on R&R.

“Further, R&R is a benefit provided under the Agreement as part of the bargain between the parties to the agreement. That benefit would be lost without recompense if notice, a different benefit, could override it,” the commissioner said.

She confirmed that payment in lieu of notice could also not include a period of unpaid R&R.

ETU labels decision a precedent

The Electrical Trades Unions (ETU) – a division of the CEPU – was quick to label the decision a precedent that opens the door for former employees to pursue unpaid termination payments

“The ETU has launched a review of the industry and we have already identified more than 3,000 FIFO workers that have been denied more than $10 million of entitlements in the same way,” ETU national legal officer Michael Wright said.

“As a result of this legal precedent, we expect to pursue claims for many more people in similar circumstances from around Australia.”

It is unknown whether the decision will be appealed.

To view the full decision, click here.

In light of this decision, AREEA members are encouraged to seek clarification and advice on their obligations before undertaking redundancies and terminations. For assistance in this area, please contact your local AREEA employee relations consultant.

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