Calculating entitlements on termination and resignation can be stressful. The question of leave loading certainly adds to this stress and confusion. So is leave loading an entitlement on termination?

Not so simple question

The question as to whether leave loading is an entitlement upon termination is one that has no clear answer at this time. This comes from the less than clear interaction of the Fair Work Act (FWA), the Modern Awards, the National Employment Standards and the precedents set by courts and commissions.

FWA is clear

The FWA is crystal clear; upon termination the employee gets paid for any leave ‘as if they had taken it’. That is to say, if they had taken it there would be leave loading attached, so it should be attached when calculating termination payments

And, so are the Modern Awards

The Modern Awards for the downstream petroleum industry (The Clerks Award, The Vehicle Manufacturing Repair Services and Retail Award and the Road Transport Distribution Award) all provide for leave loading of 17.5%.

So leave loading is an entitlement.  Except

Confusion reigns

The National Employment Standards overrule the FWA and the Modern Awards to the extent of any inconsistency. This has led to several decisions that rule either for or against leave loading as an entitlement.

Further the approval of enterprise level agreements that either include or exclude leave loading as an entitlement has added confusion.

So, what does your business do?

With confusion in the application of law in this area ACAPMA members are advised to err on the side of caution and to include leave loading in entitlements on termination. The Fair Work Ombudsman and Fair Work Commission place the standing of the employee first in decisions and recommendations. While leave loading on termination in some high turnover sections of the industry can be low, the provision can reach substantial amounts when employee tenure is longer and leave accrued levels higher.

ACAPMA members are then advised to add leave loading to their regular leave provisioning processes and prepare to pay leave loading on termination, or prepare to enter a legal battle with no clear outcome.

Here to help

ACAPMA members are reminded that they can access the advice support resources and representation of the ACAPMAlliance Workplace Relations Professionals on this issue, or indeed any other employment issue, by calling 1300 160 270.

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by  calling 1300 160 270 and speaking to one of ACAPMA Workplace Relations Professionals its free for members. Click here to apply for ACAPMA Membership.

Elisha Radwanowski
BCom (HRM & IR)
Workplace Services