WA business ordered to pay worker $20,000 in annual leave payout despite insisting it didn’t owe him anything

A Western Australian environmental projects business has been ordered to pay a former employee $20,000 after the state’s industrial relations commission found it had denied the worker his entitlement to 76 days paid annual leave.

The worker applied to the Western Industrial Relations Commission after working as an environmental technician for Stass Environmental for close to five years. He claimed he was entitled to be paid out 76 days of annual leave, as well as a 17.5% leave loading on that leave and a leave loading on 19 days of leave he had taken while employed at the business.

In response, the company said it did not owe the applicant anything, Commissioner Toni Emmanual outlined in the case decision. Instead, the employer said it had paid beyond the workers’ entitlements, claiming the worker had in fact took what amounted to 353 days off work on full pay between 2014 and 2016.

The company claimed that it had met with the staff member and communicated to him that he would be required to take all of his accrued annual leave during quiet periods and annual shutdowns, and this is why he had used up his entitlements.

However, the employee said there had been no such meeting, and he had not agreed to take paid leave during quiet times for the business, despite being directed not to work at certain times. He was also able to produce evidence that during some of the time he was not performing fieldwork for the business, he was still required to prepare and maintain equipment.

The Commissioner accepted these tasks were part of the employee’s job and were likely completed during this down time.

Commissioner Emmanuel found the employer an “unreliable witness”, highlighting that the worker had detailed records of when he completed work, and ruled the worker was never actually asked to take paid leave other than for 19 days across the course of his employment.

As a result, the employer was ordered to pay out 76 days of annual leave and a 17.5% loading on the full 95 days of leave, which includes 19 days for which it was agreed he had formally taken leave but was not paid a loading on.

SmartCompany contacted Stass Environmental for comment but did not receive a response prior to publication. SmartCompany was unable to contact the employee prior to publication.

Three steps for making leave entitlements clear: Legal expert

Director at Workplace Law Shane Koelmeyer says a case like this is a good reminder for small businesses of the key processes they can use to avoid disputes about leave arrangements.

“The first thing is give staff as much notice about leave as possible. If you’re planning on shutting down over Christmas and New Year, don’t just give people six weeks’ notice,” he says.

When the information is passed on to staff, the second step is to make the terms of the shutdown clear.

“A lot of businesses will say, ‘we’re shutting down at this time of year’, and not communicate further, but you should give [employees] plenty of notice that you’re going to do it, and at this point specify it will be annual leave,” he says. 

One way to prepare staff for this is to regularly update them on their leave balances, so that staff are aware well in advance about what proportion of their paid leave will be used over quiet periods.

“Record keeping is the third thing, so share leave balances with staff and then they know how much they’re entitled to,” he says.

Koelmeyer notes the clarity of records from the worker appeared to be important in the Commissioner’s decision for this case. This also shows how important it is for businesses to communicate leave balances to staff, so if workers believe there are any discrepancies, this can be resolved before a worker makes a big claim somewhere down the line.

Finally, when organising for staff to take time off during quiet periods, make sure you check the awards your workers are covered by, Koelmeyer says.

If a staff member hasn’t accrued enough annual leave to get paid for the full period of a company-wide shutdown, employer obligations will vary depending on the circumstances of the employment.

“It depends on the award that covers them, so check the award,” Koelmeyer says.

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