It has generally been thought that an employer cannot dismiss an employee while he or she is taking a period of lawful leave. The traditional view was expressed by a highly respected Federal Court Magistrate (now Judge) and summarized by another Federal Circuit Court judge in another case recently in this way.
“The Applicant has referred me to what was said by Lucev FM (as His Honour then was) in Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd  FMCA 463. His Honour analysed a number of decisions made by Industrial Commissions as well as the relevant provisions of the then Workplace Relations Act 1996 (Cth) (“WR Act”).
At paragraphs 116 and 117, His Honour said the following:
“116. An employer cannot give notice of termination of employment to an employee on approved leave, or, at least, the notice cannot run concurrently with the approved leave because to do so is to deprive the employee of their right to paid leave. The principle has been established in cases concerning the interpretation of Awards and employees’ entitlements on termination. In the The Chief Secretary v The Hospital Employees Industrial Union of Workers of WA (Coastal Branch) the Court of Arbitration in Western Australia held that a government department cannot give notice of dismissal so as to have any portion of the month prescribed for the notice of dismissal running concurrently with the annual holidays of the employee concerned. In McSharer v Hospital Employees Industrial Union of Workers, WA, Burt J held that the right to terminate employment on one weeks notice was subject to an entitlement to leave and therefore an employer cannot give notice which in its terms would terminate employment within a period of annual leave. In AMWSU v Multicon Engineering (WA) Pty Ltd each of the Justices of the Industrial Appeal Court held that notice of termination was not able to run concurrently with a period of annual leave because to do so would be to deny the employee the benefit of the annual leave to the extent of the notice of termination. In Swingler v Methodist Ladies College Smith C (as she then was) applied the same principle to find that notice could not operate at law whilst the employee was on long service leave.
- In this case the provisions of the WR Actreinforce the proposition that an employee on approved leave, and specifically maternity leave, cannot have that leave interfered with by a period of notice. In this case, even though the prerequisite period of service for entitlement to maternity leave had not been met by Ms Poppas, Cuddles Management granted her maternity leave. Section 265of the WR Act relevantly provides that maternity leave is “a single, unbroken period of unpaid leave (ordinary maternity leave)”. Section 279(1) of the WR Act entitles an employee to terminate employment during maternity leave “subject to any notice required to be given by the employee”. There is no co-related right given to an employer to terminate an employee’s service during maternity leave. Section 280 of the WR Act guarantees an employee who has taken maternity leave the right to return to the position held immediately before the start of the maternity related leave period. In the Court’s view those provisions make it clear that an employer is not entitled to terminate an employee’s service whilst the employee is on maternity leave. Furthermore, and in any event, to do so would entitle an employer to give notice during a period during which the employee is not being paid. If notice were to run during this period the employee’s entitlement to a paid notice period, or pay in lieu of notice, would be vitiated. Having regard to the provisions ofss.265, 279 and 280 of the WR Act the Court’s view is that that cannot have been the intention of the Parliament. Furthermore, it is contrary to the law as established in the Chief Secretary, McSharer and Multicon Engineering.”
The reasoning of His Honour relies upon the fact that s.279 of the WR Act entitled an employee to terminate employment during maternity leave. His Honour pointed out that there was no reciprocal section that allowed an employer to terminate employment during maternity leave.
The logical conclusion using the expressio unius est exclusio alterius principle of statutory interpretation would be that an employer could not terminate an employee’s employment while they are on maternity leave”
However the judge in the most recent case (Vasta J in Power v BOC Pty Ltd (No 2) (2017 FCCA 2387 delivered 3 October 2017) has now held that the above reasoning does not apply to the current Fair Work Act and accordingly there is no general prohibition against an employer terminating the employment of an employee whilst taking maternity leave.
“As is obvious, His Honour was referring to an Act that has since been repealed. While s.265 and s.280 of the WR Act survived and were incorporated into the FW Act, s.279 did not fare so well and does not have a corresponding section in the FW Act.
Because s.279 of the WR Act did not migrate to the FW Act and the legislature enacted s.83 of the FW Act that did not have a corresponding section in the WR Act, it should be inferred that the Parliament was “changing the landscape” with respect to the area of parental leave. A quick comparison of Part 7 Division 6 of the WR Act with Chapter 2 Part 2-2 Division 5 of the FW Act bears this out.
For those reasons, I do not consider that the statement made by His Honour that “an employer is not entitled to terminate an employee’s service while the employee is on maternity leave” is a statement of the current state of the law.
I find that since the enactment of the FW Act, an employer is entitled to terminate the employment of an employee who is on maternity leave, as long as that termination is for a genuine reason.”
But what does this mean?
Vasta J went on to observe that
“There is still much force in the observations made by Judge Lucev in the Cuddles (Supra) case. Where there has been an agreement by an employer to allow an employee to be on some form of paid leave, an employer cannot dismiss the employee while the employee is on the leave. As His Honour noted “to do so is to deprive the employee of their right to paid leave”.
In this case, the Applicant had the right to take the annual leave plus the paid parental leave as leave during her unpaid maternity leave. As noted earlier in these reasons, this “paid leave” is the leave referred to in s.84 of the FW Act.
In keeping with the line of authority summarised by His Honour Judge Lucev, that leave could not be used as part of any “notice period” and any termination must be taken to occur at the end of that leave. In real terms, it means that any leave must be totally paid out before the other entitlements due at termination are to be calculated.
Whilst this may be a different result to that adjudicated by Justice White in the Stanley (Supra) case, this is because the right to paid leave is a concurrent right to unpaid maternity leave. In the present case, the concurrent right conferred by s.79 of the FW Act distinguishes it factually from Stanley (Supra).
The consequence is that the Applicant ought to have been paid her full entitlement to annual leave and paid parental leave before any by-product of the redundancy took effect.
The other consequence is that s.83 of the FW Act should have been utilised in conjunction with the “Leaving BOC policy”.”
Taking these views to their logical conclusion, it would appear that this case is thus authority (for the time being) for the propositions that
(a) there is no genera prohibition against an employer dismissing an employee during maternity or parental leave; but
(b) an employer is not permitted to penalize the employee by imposing any monetary loss upon her (or him) by applying the dismissal to reduce the full financial entitlements the employee otherwise has to complete the period of leave.
Judge Vasta’s decision is not without its difficulties. For example His honour writes “As noted earlier in these reasons, this “paid leave” is the leave referred to in s.84 of the FW Act.’ Yet sec 84 does not deal with “paid leave”, instead referring to “unpaid parental leave”. We will need to monitor future decisions on this issue to fully understand the current state of the law.