Wednesday, 31 July 2019

Open To Interpretation: Employer Trips Personal Leave Landmine in Enterprise Agreement

In preparing workplace agreements, careful drafting is crucial, with future legal proceedings potentially turning on the interpretation of a single word. Interpretive anomalies can exist in all kinds of agreements within the workplace, from enterprise bargaining to employment and contractor agreements.

While painstaking drafting can seem time consuming and demanding, the benefits in taking the time to get it right at the outset of the relationship far outweigh the costs, distraction and headaches of subsequent litigation.

The pitfalls of careless drafting were recently experienced by Peabody Energy Australia, when the Fair Work Commission found that an employee was entitled to 120 hours of paid personal leave, without having performed a single hour of work in the past year. Rather, the employee had been on a mixture of paid and unpaid leave from December 2017 until January 2018 when his employment was ultimately terminated.

The enterprise agreement clause in issue provided that 120 hours of personal leave would be credited at the outset of each year of employment, and that at the time of termination, if the employee had more than 70 hours accrued, any unused personal leave would be paid out to that employee.

Peabody attempted to argue that the enterprise agreement implied a requirement that some work had to be performed in order for the employee to be entitled to the annual credit of personal leave, but the Commission found that the precise wording could not be considered conditional on any period of service. Because the applicant was technically still employed at the anniversary of his employment, the fresh 120 hours of personal leave was to be credited, and was therefore owing at the time of termination.

Interpretation headaches like this are absolutely avoidable – seek assistance early with drafting your employment documents in plain and clear language to minimise the prospects of costly and distracting disputes.

For assistance with employment contracts or other documents, contact our team today on 1300HRLEGAL or email

Case Study:  Construction, Forestry, Maritime, Mining and Energy Union v North Wambo Pty Ltd T/A Peabody Energy Australia [2019] FWC 4732


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.