Do we have to pay employees for public holidays if they took leave without pay over Christmas, especially given that some employees may have exhausted their leave due to COVID-19?

Q Some of our employees took leave without pay over the Christmas/New Year period. They have queried why they were not paid for the public holidays. We don't think they are entitled to payment as they requested the time off without pay.

Should employees be paid for public holidays during a period of leave without pay?

A An employee’s entitlement to a paid public holiday that falls during a period of leave without pay has been a source of conjecture for years and has not been the subject of judicial review.

The Fair Work Act does not appear to clarify this point, although s116 states that if an employee does not have ordinary hours of work on the day the public holiday falls, the employee is not entitled to payment for the holiday.

To avoid this potential problem, an employer could, as a condition of consenting to an employee’s request for leave without pay, alter the employee’s ordinary hours to zero for the period of leave without pay. This would mean the employee has no ordinary hours that would fall on the day any public holiday occurs during leave without pay.

What happens if an absence before or after a public holiday is unauthorised?

There is nothing in the Fair Work Act to suggest that an employee forfeits their entitlement to payment for a public holiday if he/she takes an unauthorised absence on the working day before or after a public holiday.

While such a term was common in awards and agreements some years ago, the right of an employer to deduct payment for a public holiday in this circumstance was removed with the start of the Fair Work Act on 1 January 2010.

While an unauthorised absence before or after a public holiday may be grounds for instigating disciplinary action, an employee would still be entitled to payment for a public holiday that falls on a day the employee is normally rostered to work.

Must employers accrue paid leave entitlements during a period of leave without pay?

Under the Fair Work Act, an employee does not accrue paid annual leave or personal/carer’s leave during a period of leave without pay.

It should be noted that an unpaid authorised absence does not break an employee’s continuity of service with an employer (ie service prior to leave without pay still counts towards total service).

Member Plus members of the Australian Childcare Alliance NSW have access to ACA NSW’s Leave Policy and Leave Without Pay Policy that cover annual leave and other types of leave.

PUBLISHED: 9 DECEMBER 2020