Do you know whether paid leave entitlements accrue when employers lockout employees in response to protected industrial action? A recent decision of the Fair Work Commission (FWC) clarified this issue.
Employees of Carter Holt Harvey Woodproducts Australia Pty Limited (CCH) had been ‘locked out’ from the workplace by CCH for a 74-day period, in what was considered to be protected ‘employer response action’. This lockout followed protected industrial action taken by CCH workers.
The CEPU and the CFMEU lodged a dispute with the FWC to determine whether employees were entitled to accrue annual leave and long service leave during a lockout period.
In the decision, the FWC considered whether the lockout constituted a period of ‘unpaid authorised absence’. This is because during a period of ‘unpaid authorised absence’ paid leave will not accrue under the Fair Work Act.
The unions argued that an ‘authorised absence’ did not include a lockout, as this was a direction to the employees not to attend work, rather than an authorised absence at the initiative of the employees.
The Decision: Does Annual Leave Accrue During Lockout?
The Full Bench of the FWC found that the lockout was an ‘unpaid authorised absence’. As a result, the employees did not accrue annual leave during the lockout period. In the decision, it was considered irrelevant whether the employees wished to be absent or not. This indicates that the fact the employer had directed the absence only strengthened the argument that it was authorised.
The Decision: Does Long Service Leave Accrue During Lockout?
In relation to long service leave, the Full Bench found that the lockout period was a ‘period of interruption concerning industrial matters’, which did not break the employee’s continuity of service for the purposes of long service leave entitlement.
However, the period of interruption was not to be counted as continuous service, and therefore not to be included for the purposes of accrual of long service leave.
Lessons For Employers
This decision provides important clarification for employers considering whether to take ‘employer response action’ in the form of a lockout. The decision may also reduce the disincentives for employers to proceed with lockouts, given that employees will not accrue annual leave or long service leave during the period of lockout.
Case study: CEPU & CFMEU v Carter Holt Harvey Woodproducts Australia Pty Limited