JobKeeper is not just a financial subsidy for qualifying employers. We previously wrote about the extraordinary powers that employers help get them to the other side of the COVID-19 pandemic (or at least until September when the JobKeeper scheme is scheduled to end).

One of these amendments is that an employer can request an employee take annual leave if the employer qualifies for JobKeeper and is entitled to JobKeeper payments for that employee. The employee is required to consider the request and must not unreasonably refuse.

This is particularly helpful for employers who have needed to stand employees down because COVID-19 has prevented them from trading, or alternatively, for employers who have employees working in a reduced capacity in order to minimise salary costs.

There are some limitations for employers. Specifically, the employee must retain two weeks paid annual leave after complying with the request. The two weeks operates on a pro-rata basis, so a full-time employee would need to retain 10 days’ annual leave while a 0.6 FTE would need to retain six days’ annual leave.

Fair Work Commission Decision

A recent decision by the Fair Work Commission (Commission) has demonstrated that employees’ must have compelling reasons to refuse an employer request to take annual leave. In this case, the Commission ordered an employee of Village Roadshow Theme Parks (VRTP) to stop unreasonably refusing to take annual leave following a request from her employer.

VRTP operates various theme parts, including Seaworld, Movieworld, and Wet ’n’ Wild. VRTP stood its employees down in March and these businesses remain closed at today’s date.

VRTP issued its employees with a letter on 29 April 2020. The letter confirmed that the employee was eligible to participate and JobKeeper and remained stood down for work. This letter also contained a request for employees to use their leave entitlements. Specifically, it asked that all employees with annual leave balances in excess of two weeks to take 2.5 days of annual leave per week until:

the employee’s annual leave balance is two weeks; or
27 September 2020 (being the last day of the JobKeeper program).

The letter also reminded employees that they were obligated to consider the request and to not unreasonably refuse. Employees were then asked to provide any comments or questions to their manager. Employees were also given the opportunity of having a direct discussion with their manager should they prefer.

One employee, Ms McCreedy, did not agree to take annual leave. She was employed as a part-time employee working 30 hours per fortnight (typically two days per week over 15 hours) and felt it unreasonable that her annual leave balance would be reduced to four days if she complied with the request.

Specifically, the employee provided the following reasons for her refusal:

the JobKeeper legislation was not intended to assist a large employer such as VRTP to offset annual leave accruals;
long-serving employees working for a very large corporation should not have their annual leave adversely affected (the employee had approximately 130 hours of accrued annual leave);
the request impacted long-serving employees unfairly because of their higher leave balances; and
she had five holidays planned over 2020-21 and wanted to use her annual leave for this purpose.

The employee also referred to a medical condition in support of her argument that she was justified in refusing the request.

In response, VRTP said that the employee’s refusal did not meet its guidelines of what constituted a reasonable refusal. VRTP also said that the employee had not notified it of her planned leave prior to the business shutting down on 23 March 2020. VRTP also referred to its leave policy, which said that all leave should be approved by a manager before it is guaranteed.

The employee did not accept this. She continued to assert that her medical condition justified her refusal. She also said that senior management should be responsible for the ‘heavy lifting’ in reducing costs to the business.

VRTP said that it took an employee’s special circumstances into account (especially around medical conditions). However, it said that this employee typically took one – three days’ of annual leave at any one time in order to maximise her leave around the days of the week where she is not rostered to work. VRTP said this was indicative of the employee taking annual leave at a time that was most suitable to her and not attributable to any medical condition.

Finding

The Parties were unable to resolve the matter themselves and so the Commission proceeded to arbitration.

They key question for the Commission was whether the employee had unreasonably refused VRTP’s request for her to take annual leave. The Commissioner held that the employee had unreasonably refused for the following reasons:

the employee committed herself to planned trips without obtaining formal approval for the leave from VRTP;
the employee can access her long service leave for future trips; and
the employee’s medical condition does not warrant a requirement that her annual leave balance be in excess of two weeks.

The Commissioner did not accept the employee’s argument that these provisions should only be available to smaller employers.

The employee was ordered that she not continue to refuse the request by VRTP.

The case confirms that a reasonable refusal will be a high bar for employees to meet.

For further information please contact:

Jasmine O'Brien
Principal
T +61 3 9611 0149 l M +61 401 926 108
E jobrien@sladen.com.au