A recent decision from the Federal Court has clarified the application of Long Service Leave to certain employees. This weeks HR Highlight will briefly review the implications of this case.
Which Long Service Leave provision applies?
The central question in front of the Federal Court in this case was wether the employee in question was covered by a preserved Federal Long Service Leave Award, or by the State Long Service Leave legislation. If the employee was covered by the preserved Federal Award then there would be no requirement for the employer to pay long service leave, based on the length of service. However, if the State legislation applied then the employees length of service would have qualified them for long service leave payment on termination.
The South Australian Industrial Court found that the State legislation applied to the employee, so they were entitled to the long service leave. However, the Federal Court has overturned this decision, ruling that the employee was actually covered by the preserved Federal Award.
Why the confusion?
The confusion comes from the myriad of instruments across the country that deal with Long Service Leave. In this case there was a specific Federal Award that provided for Long Service Leave. This Award only applied to businesses that were members of certain industry associations. The employer in this case was an active member of a respondent association.
When the Fair Work Act came into effect it provided for, under section 113 (s113). S113 provided for long service leave entitlements in a specific order of importance. First if a Persevered Long Service Leave Award applied it would be the instrument. Then if there was no Preserved Award then the State Legislation would be the instrument.
In this case;
There was a Preserved Long Service Leave Award that existed in the industry
The Preserved Long Service Leave Award was binding only to members of certain industry association
The employer was a member of one of these associations in 2009 when the Fair Work Act came into effect
The employer was a member of one of these associations in 2011 when the employee was terminated
As such the Preserved Long Service Leave Awards applies in this case.
If the business was not a member of the association when the employee was terminated the State legislation would have applied.
What is the impact?
The impact of this case on businesses may be nothing, or may change the eligibility, service and pro rata terms for Long Service Leave for their employees. ACAPMA advises members that are concerned about the impact of this case to contact the ACAPMA Workplace Relations Professionals to discuss if this case has an impact on their particular business. ACAPMA members can access this service by calling 1300 160 270.
Want to know more?
If you would like to know more about this case please see: Maughan Thiem Auto Sales Pty Ltd v Cooper  FCAFC 94 (1 August 2014)
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Elisha Radwanowski | BCom (HRM & IR)
Workplace Services Manager