In brief - in a decision that could have significant implications for all employers, the Federal Court has found in favour of Qantas, ruling the airline does not have to pay sick leave entitlements to approximately two thirds of its employees stood down during the COVID-19 pandemic.

Qantas announced its decision to stand down the majority of its employees in mid-March 2020 due to the significant impact of the pandemic and government restrictions put in place to eliminate non-essential travel and flatten the curve. The airline advised its employees at the time that they would not be able to access sick/personal leave, compassionate leave or carer's leave. However, employees were permitted to access their annual leave and long service leave (and other forms of unpaid leave) during the period of stand down. 

In support of its decision, Qantas maintained that the entitlement to personal/carer's leave arose when an employee was unfit for work due to illness or injury (or other unexpected emergency) but, in circumstances of a stand down, there was no work for the employee to perform and therefore no work from which they could be absent. This, Qantas argued, meant there was no entitlement to personal/carer's leave.

In response, the Transport Workers' Union (TWU) and the Qantas Engineering Alliance, which is comprised of members of the Australian Manufacturing Workers' Union (AMWU), the Communications, Electrical and Plumbing Union (CEPU) and the Australian Workers' Union (AWU), commenced separate proceedings in the Federal Court challenging the approach taken by Qantas. The unions argued that Qantas was under a legal obligation to pay its staff all leave entitlements, including sick/personal leave, relying on section 525 of the Fair Work Act 2009 (Cth) (FW Act), which states that a worker is not taken to be stood down while taking paid or unpaid leave authorised by the employer, or is otherwise authorised to be absent from their employment. 

Justice Flick of the Federal Court agreed with Qantas, highlighting that the "object and purpose" of the stand down provision is to assist an employer who, "through no fault of its own", cannot provide useful employment to its employees and would otherwise face the possibility of terminating its workforce. In those circumstances, Justice Flick determined that having to pay for personal/carer's leave and compassionate leave entitlements would be inconsistent with the purpose of standing down, that is, to protect employees from potential termination and to provide financial relief to employers from the obligation to pay wages. 

Justice Flick also agreed with Qantas that the entitlement to sick/personal or compassionate leave is "an entitlement on the part of the employee to take leave from otherwise performing the work they are required to perform", and would therefore not apply in a situation where there is no work to be performed due to a stand down. In reaching his decision, Justice Flick affirmed the decision of the Full Federal Court in Mondelez v Australian Manufacturing Workers Union [2019] FCAFC 138, in which the Court held that the entitlement to personal/carer's leave is a "form of income protection", with Justice Flick concluding that "if there is no work available to be performed by the employee, there is no income and no protection against that [income] which has not been lost".  

His Honour's decision raises the obvious question about the practical effect of section 525 of the FW Act which, as noted above, provides an employee is not taken to be stood down while:

(a) taking paid or unpaid leave authorised by the employer; or 

(b) otherwise authorised to be absent from their employment. 

In answer to this question, Justice Flick reasoned that the intention of section 525(b) is to "carve out" circumstances in which the FW Act itself authorises an employee to be absent from work, for example on eligible community service leave, jury service or on public holidays.  

As a result, the unions' case was dismissed.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.