Legal: Partial long service leave payment denied after almost 10 years’ service
Queensland Teachers' Journal, Vol 124 No 8, 8 November 2019, page no. 27
A recent case before the Industrial Court has prompted the state government to look at removing a legal “anomaly” that can put employees’ entitlement to a long service leave payout at risk.
Mr Schipp was a casino croupier employed by The Star Entertainment Qld Ltd. After suffering an anxiety disorder, he was unable to obtain medical clearance to return to his original role, and his employment was terminated just days short of a decade’s service. This was on the basis that he was “not fit to perform the inherent requirements” of his role “now or in the foreseeable future”, and “no reasonable accommodations” could be made for his condition.
As a consequence, he was not entitled to a proportional payment of long service leave.
Long service leave entitlements
Under Section 95 of the Industrial Relations Act 2016 (Qld) (the act), in certain circumstances an employee is entitled to a long service leave payout proportional to what a person with 10 years’ service would receive in certain circumstances. These include:
- resignation because of “illness or incapacity”
- dismissal for a reason other than “conduct, capacity, or performance”
- when the employee has been “unfairly dismissed”.
In its letter of termination, The Star asserted that Mr Schipp was not entitled to this payout because his illness made him unable to perform the inherent requirements of the role, and therefore, he was not dismissed for a reason other than his capacity.
However, the letter continued that if he had resigned because of his illness or incapacity to return to his role, then he would be entitled to the partial payment.
Mr Schipp took legal action to try and enforce the payment. After he failed at the Queensland Industrial Relations Commission (QIRC), Minister for Industrial Relations Grace Grace joined his appeal to the Industrial Court.
In both proceedings, Mr Schipp’s case boiled down to one question: what did “capacity” mean?
All cards on the table
At the appeal, Mr Schipp and the Minister argued that QIRC Commissioner Thompson’s view that “capacity” included illness-based reasons was a misinterpretation of the act.
Mr Schipp highlighted the “unjust, unreasonable and absurd result” of the Commissioner’s interpretation, which meant that a person who had resigned because of illness was entitled to a pay out, but a person dismissed for the same reason was not.
Minister Grace Grace followed suit, and focusing on principles of legal interpretation, argued that the Commissioner’s interpretation disrupted the “harmony” between the alternative conditions. The Minister also argued that the Commissioner’s view “stretches the language” of the act, and properly construed, “capacity” refers to situations where an employee’s skill does not meet the requirements of the job.
However, the Industrial Court held that “capacity” referred not only to an employee’s skill, but also, the employee’s “physical or mental capacity” to perform the work. In reaching this conclusion, Deputy President Merrell considered the language and content of the predecessor to section 95 (section 43 of the Industrial Relations Act 1999 (Qld)), a review of that section by the Full Bench of the QIRC in 2000 (2000 Review), and the previous Minister’s Second Reading Speech when introducing section 95 of the current act.
He confirmed that from the Second Reading Speech, the 2000 Review established the “context and purpose” of section 95.
In that review, the Full Bench indicated that it was “entirely appropriate” to deny an employee’s right to the proportional payout where there is a “valid reason for the dismissal related to the employee’s conduct, capacity or performance”.
It was “clear” to Deputy President Merrell that this category included employees dismissed because they lacked the “physical or mental state of health” to perform the work for which they were employed. Additionally, Deputy President Merrell found this interpretation to be consistent with case law on both the previous Queensland workplace legislation and analogous Commonwealth legislation, where, in context of the latter, “capacity” meant: “an employee’s capacity to perform, in the future, the duties required pursuant to the contract of employment and if an employee’s state of health had significantly diminished... then the employer had a valid reason for termination”.
Following this analysis, the appeals were dismissed.
Play your cards right
The Minister expressed her disappointment with the outcome of the appeal, and her intentions to remedy this “anomaly” in the act. In the meantime, if you find yourself in a similar situation, you may be better off keeping your cards close to your chest and resigning because of illness or incapacity before your employer beats you to it. However, no such decision should be made until after receiving and considering, careful, informed advice.