The Federal Court has ruled annual and personal leave does not accrue on periods of unpaid rest and recreation leave in what has been described as a commonsense decision for the FIFO industry.
In a decision on May 14, the court dismissed an application by the Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia (CEPU) to backpay leave to workers employed by SIMPEC on the Iron Bridge Project near Port Hedland.
The union had argued that workers on a 21-day-on, 7-day-off swing roster were entitled to accrue leave during their unpaid off-swing periods, claiming workers regularly worked at least 152 hours including overtime during an on-swing period and that this compressed work schedule met the criteria for full-time service.
It claimed that if the workers had been employed to work the same hours but on a regular five-day working week, then they would have accrued annual leave and personal leave entitlements based on working 152 ordinary hours for every four weeks of work.
However, the court rejected the union’s claims, siding with SIMPEC’s interpretation of its Enterprise Agreement (EA) and the Fair Work Act 2009. The EA clearly defined the off-swing week as “unpaid authorised leave,” which under section 22(2) of the Fair Work Act, does not count towards service for the purpose of leave accrual.
The unpaid leave threshold
Justice Craig Colvin clarified that annual leave and personal leave accrue based on an employee’s ordinary hours of work during periods of paid service. As unpaid leave does not meet this threshold, employees on swing rosters like SIMPEC’s are not entitled to accrue leave during off-swing weeks.
“Ordinary hours that would otherwise have been worked in that [unpaid] period do not count towards the accrual of annual or personal leave,” Justice Colvin stated.
He added that while continuous service is maintained during unpaid authorised leave, those specific periods are excluded from calculating accrued entitlements under National Employment Standards (NES).
This decision is significant for construction companies operating remote FIFO projects, where compressed swing rosters and unpaid R&R leave are common practice.
‘A critical decision’
CCIWA Construction Services Manager Kate Schick said the decision was “a critical decision for employers in the FIFO industry”.
“As unpaid leave and authorised unpaid absences are defined as periods that do not count as service under s22 of the Fair Work Act, and SIMPEC defining R&R as a period of unpaid authorised leave in its agreement, we could not see how any other outcome could be reached,” she said.
“It will be a relief to employers in the industry that common sense has prevailed, however the decision highlights the importance of proper and careful drafting in respect to enterprise agreements.”
If you require any assistance on matters such as this, contact CCIWA’s Construction and Mining Services team via [email protected].
