The Australian Industry Group (AIG) has lodged an appeal against a decision by Fair Work Australia that it says may redefine what counts towards the length of “service” an employee has provided under the Fair Work Act.
Most employers have operated under the belief that unfair dismissal laws only apply for the length of service given when the employer is paying wages – employees have to work a minimum of six months to be eligible, or 12 months for small business employees (15 or less staff).
But the case Bambach v WorkPac found that a period when an employee is receiving payment from a workers’ compensation authority can also count towards the period of “service”.
In the case, Fair Work Australia found that an employee who worked for less than three months for an on-hire agency before spending more than a year on workers’ compensation leave was still covered by unfair dismissal laws.
The interpretation of “service” by Fair Work Australia meant that the worker had been employed by WorkPac for more than six months, and was protected from unfair dismissal.
AIG says the definition of “service” is crucial, as there are minimum service criteria for unfair dismissal laws, redundancy pay and to the accrual of annual leave and personal leave for employees.
“This meaning is critical for determining the entitlements of employees in a wide range of day-to-day circumstances,” says AIG chief executive Heather Ridout.
Stephen Smith, the director of national workplace relations at the AIG, told SmartCompany that in AIG’s view the definition of service should be linked to paid leave which is paid by the employer.
“We think the commissioners have got the interpretation wrong and imposed an unworkable definition of this concept.”
“There are a very large number of different types of absences and leave that someone might have from the work place whether it is leave without pay or maternity leave or something else that links back to the definition of service.
“If someone is off work and is not being paid by the employer you have to look at whether there is a sufficient relationship between whoever pays this and the workplace.
“There are lots of situations where someone is off work and is paid by someone else, like workers’ compensation.”
Smith says the appeal should put an end to “a lot of uncertainty” which has resulted from Fair Work Australia’s initial finding that defined service as including time spent while being paid workers compensation.
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“It would increase costs for employers with this interpretation and would be inconsistent with what most employers are doing at the moment, it has quite sweeping implications,” he says.
Law firm Herbert Geer claims there is confusion under the Fair Work Act.
“It goes to a confusion in the Fair Work Act that has come up in a couple of different contexts about how you deal with a period when you are on Workers Compensation Leave”, says Chris Hartigan partner at Herbert Geer.
“If a worker is being paid and then they go on a period of unpaid leave what the act says is that absence from work is not a break in service but it is not counted as service.
“The question then is when you go on workers compensation leave you are paid by an external statutory insurer, but it comes through the employer’s payroll although the substance of the payment does not come from the employer.”
WorkPac declined to comment.