FWC rules employee unreasonably refused employer’s request to take annual leave while receiving JobKeeper

Posted by on Jun 2, 2020

In Leonie McCreedy v Village Roadshow Theme Parks Pty Ltd [2020] FWC 2480, the Fair Work Commission (FWC) has held that an employee unreasonably refused her employer’s request to take annual leave. The employer requested Ms McCreedy to take one day of annual leave each week until either her annual leave balance was 2 weeks or 27 September 2020 was reached. The decision was determined under the new Part 6-4C of the Fair Work Act 2009 (Cth) (Fair Work Act).

The Facts

Ms McCreedy is a part-time employee who works 15 hours per week and had been stood down since 23 March 2020. She was eligible for JobKeeper, which meant that instead of her typical payment of $375 per week for 15 hours of work, she was receiving $750 per week under the JobKeeper scheme.

Village Roadshow Theme Parks Pty Ltd (Village Roadshow) sent a letter to its employees requesting that they take 2.5 days of annual leave per week if their annual leave balance was in excess of 10 days. The letter was sent to its employees (including the applicant, Ms McCreedy) on 29 April 2020. At the time the leave request was made, Ms McCreedy and a large number of employees were stood down due to COVID-19. The letter also outlined that Ms McCreedy was eligible to participate in the JobKeeper scheme.

The letter set out that the Senior Leadership team had their salaries reduced, there was a reduction in costs where possible and requested employees to use their annual leave entitlements for a defined period. The letter also outlined that the use of annual leave was a request that the employees had to consider and that they were not to unreasonably refuse the request.

Ms McCreedy did not accept Village Roadshow’s request to use her annual leave. Ms McCreedy sent a response stating that she did not want to use her annual leave for a number of reasons, including the fact that she had a number of planned and/or booked holidays towards the end of the year and in 2021, and would also like to maintain her annual leave balance for medical reasons.

Ms McCreedy’s request not to use her annual leave was escalated to the senior management team who denied her request to maintain her annual leave balance.

The Decision

Ms McCreedy filed a dispute application with the FWC due to Village Roadshow’s request for her to use annual leave to reduce her balance to 4 days, which given her part-time hours amounted to a balance of 2 weeks’ leave. Ms McCreedy’s position was that the request was unreasonable, and that the JobKeeper provisions of the Fair Work Act should only be available to smaller employers, not large companies like Village Roadshow. The relevant provision considered by the FWC is section 789GJ of the Fair Work Act:

Taking paid annual leave

(1)  If:

(a)  employer of an employee qualifies for the jobkeeper scheme; and

(c)  the employer gives the employee a request to take paid annual leave; and

(d)  complying with the request will not result in the employee having a balance of paid annual leave of fewer than 2 weeks;

the employee:

(e)  must consider the request; and

(f)  must not unreasonably refuse the request.

Ms McCreedy gave evidence that she had five holidays planned in late 2020 and in 2021 and needed her annual leave for those trips. Some of the holidays had been paid for in full, including flights and a cruise. In her application, Ms McCreedy also submitted that she needed her accrued annual leave for a medical condition, which was not disclosed in the judgment.

Village Roadshow clarified that the request to take 2.5 days of annual leave per week outlined in the letter to employees was for fulltime employees, and that part-time employees’ use of annual leave would be calculated pro-rata. Ms McCreedy was therefore requested to take 1 day of annual leave each week.

The FWC considered the number of weeks of paid leave Ms McCreedy had accrued, being approximately 9.3 weeks of annual leave and 8.6 weeks of long service leave. The FWC also considered that although Ms McCreedy was wanting to use her accrued annual leave and long service leave for a number of holidays, she had not yet applied for annual leave for these trips when she made the bookings, contrary to Village Roadshow’s annual leave policy and hence her leave was not guaranteed.

The FWC had to determine whether Ms McCreedy unreasonably refused the request of Village Roadshow to take annual leave. The FWC found that she did unreasonably refuse the request and her reasons for refusal, including that she had paid for holidays in advance, and that her employer was a large employer, lacked justification. The fact that Ms McCreedy would have enough annual leave for a couple of her shorter planned trips, that she had accrued long service leave that she could take instead of annual leave and that it was open to her to apply for annual leave in advance were all relevant factors in deciding that her refusal was unreasonable.

The FWC did not accept that Ms McCreedy needed her annual leave balance to remain at more than 2 weeks because of her medical condition, which it found not to be a serious condition. It is also relevant to note that at the time of the hearing, Village Roadshow’s business had been unable to operate at all for over 7 weeks, and would continue not to operate into the future short-term.

Further considerations

Interestingly, while the FWC referenced the fact that Ms McCreedy was receiving a higher salary due to the JobKeeper payment (double her usual earnings of approximately $375 per week), it was not a relevant consideration in its decision-making.

The FWC also commented that where an employee suffers from a serious medical condition which might be likely to result in them exhausting their paid personal/carer’s leave then this would be a relevant consideration in deciding if their refusal to take annual leave was reasonable.

Julia Eastoe is a Lawyer at Justitia. To view Julia’s profile, click here.