What’s the deal with JobKeeper and annual leave? Fair Work Commission offers insights

Employers asking workers to take annual leave while accepting JobKeeper payments has quickly become one of the most contentious aspects of the Morrison government’s $130 billion wage subsidy scheme.

Last week, the issue came to a head, when details of a Fair Work Commission (FWC) hearing were published, revealing a Queensland-based worker had lost their bid against Village Roadshow Theme Parks to keep their annual leave while stood down because of the COVID-19 pandemic.

The FWC has been flooded with JobKeeper dispute resolution applications in recent weeks, as employers and workers clash over the finer details of the scheme, and what they mean for the operation of workplace laws.

In the case of the Village Roadshow, the FWC ruled the worker’s refusal to take annual leave was “unreasonable”.

Let’s examine why.

JobKeeper and annual leave

While JobKeeper laws are relatively new, the FWC is already considering workplace cases where there are questions about how they apply and in what circumstances.

Under the JobKeeper amendments to the Fair Work Act, employees receiving wage subsidy payments are required to consider an employer’s request they take paid annual leave.

In the case of Village Roadshow Theme Parks, the company wanted its worker, a JobKeeper recipient, to take one day of annual leave per week.

The worker is a part-time employee at Village, working two-day weeks on average.

Minimum leave threshold

While the JobKeeper provisions in the Fair Work Act enable employers to request employees receiving wage subsidies draw down on their annual leave, there are conditions.

Foremost, employers aren’t allowed to run down an employee’s leave balance below two weeks.

But as the FWC  considered, this looks very different for full-time and part-time workers.

While Village would be able to reduce a full-time worker’s leave balance to no less than 10 days (two weeks), the part-time worker, in this case, faces their leave being reduced to four days.

The worker has 18.6 days of annual leave and 17.3 days of long service leave, equating to about 18 weeks worth.

The 13-week JobKeeper period would see their leave balance reduced to 7.6 days, the FWC determined.

Crucially, this is above what the FWC regarded as a four-day minimum in the case of this particular part-time worker.

The takeaway here is the two-week minimum depends on the typical work hours of a JobKeeper recipient employee. It’s not a blanket 10 days.

Employers must request leave be taken

The JobKeeper laws require the commission to consider fairness between both parties when a dispute arises, and the FWC considered that Village has been unable to operate its theme parks for the time being.

This served as the main justification for Village making leave requests ⁠— that it was unable to continue normal business operations.

Crucially, while other JobKeeper enabling directions such as stand down orders must be reasonable in all circumstances, requests to take annual leave put the onus on workers, as the FWC found.

“The test is not, however, whether VRTP has acted reasonably or unreasonably; it is whether Ms McCreedy has unreasonably refused the request of VRTP [Village Roadshow Theme Parks],” Commissioner Hunt said.

Essentially, employers must request and receive written agreement about taking annual leave under JobKeeper, but whether this request was reasonable or not isn’t within the scope of the law.

Workers must not unreasonably refuse

If workers refuse a request to take annual leave while receiving JobKeeper, they must not do so unreasonably, and this is ultimately what this case hinged on.

The worker argued they had already planned several holidays to use this leave, and that Village Roadshow, a large business, could afford to continue without dipping into leave entitlements.

But this leave had not been approved by Village yet, and the FWC did not respond well to the worker’s argument that Village was a large business, saying there’s no distinction in the JobKeeper laws for size of business.

“I find that her reasons for her refusal lack justification in fact or circumstance,” Hunt said.

“[The worker] has had little to no regard to VRTP’s, in my view, reasonable request to relevant employees to assist in reducing VRTP’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.”

There are three broad takeaways here. Employers can ask employees receiving JobKeeper to take annual leave, but they must have reason for doing so, and not seek to reduce a worker’s leave balance below two weeks.

Lastly, employers must seek agreement from workers about taking their annual leave, but there must not be an unreasonable refusal of any requests.

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