Pub­li­ca­tions

Long ser­vice leave and res­ig­na­tion because of domes­tic or oth­er press­ing necessity”

Intro­duc­tion

An issue which aris­es from time to time is, whether long ser­vice leave is payable where an employ­ee leaves their employ­ment due to some press­ing per­son­al domes­tic cir­cum­stance. Can an employ­er decline to pay long ser­vice leave in this situation?
An employee’s enti­tle­ment to long ser­vice leave is reg­u­lat­ed by State or Ter­ri­to­ry based legislation.

In all such leg­is­la­tion there is pro­vi­sion that that once an employ­ee has been employed for a cer­tain min­i­mum peri­od of time the employ­ee will not lose their enti­tle­ment to long ser­vice leave if they resign their employ­ment. In oth­er words, if they resign – for what­ev­er rea­son — after this min­i­mum peri­od of ser­vice, they will always be enti­tled to have their long ser­vice leave paid out on ter­mi­na­tion of employment.

In addi­tion, cer­tain State/​Territory based leg­is­la­tion makes pro­vi­sion for employ­ees to be paid out pro rata long ser­vice leave after a less­er peri­od of employ­ment has been served where they resign in cer­tain circumstances.
In oth­er words there is often two dis­crete min­i­mum peri­ods of ser­vice set out in applic­a­ble leg­is­la­tion to keep in mind when deter­min­ing eli­gi­bil­i­ty to long ser­vice leave upon resignation.

A com­mon exclu­sion from the enti­tle­ment to pay­ment of pro rata long ser­vice leave on res­ig­na­tion (if res­ig­na­tion occurs with­in a par­tic­u­lar peri­od of ser­vice) is where the employ­ee ter­mi­nates the employ­ment for rea­sons oth­er than ill­ness, inca­pac­i­ty, or domes­tic or oth­er press­ing neces­si­ty”. In such cir­cum­stances, there­fore, the rea­son for an employee’s res­ig­na­tion will be crit­i­cal in deter­min­ing whether they are enti­tled to a pay­ment for pro rata long ser­vice leave or not.

Whilst it is rel­a­tive­ly straight-for­ward for an employ­er (or a court) to deter­mine whether an employee’s res­ig­na­tion is because of ill­ness or inca­pac­i­ty, the ques­tion becomes more dif­fi­cult if an assess­ment is required as to whether a res­ig­na­tion is because of domes­tic or oth­er press­ing neces­si­ty”.

This arti­cle first exam­ines the pro­vi­sions in State and Ter­ri­to­ry leg­is­la­tion relat­ing to long ser­vice leave and res­ig­na­tion, before focus­ing on how courts have inter­pret­ed the mean­ing of domes­tic or oth­er press­ing neces­si­ty”.

Leg­is­la­tion
Long Ser­vice Leave Act 1976 (ACT)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive a pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is five years (s 11C(1)(b)).

How­ev­er pro rata pay­ment is only avail­able upon res­ig­na­tion if the res­ig­na­tion is:

  • because of ill­ness or inca­pac­i­ty or a domes­tic or oth­er press­ing neces­si­ty of such a nature to jus­ti­fy the ter­mi­na­tion” (s 11C(1)(a)(i); or

  • on or after the per­son has attained the min­i­mum retire­ment age set by an applic­a­ble award or agree­ment, or in oth­er case 65 years old (s 11C(1)(a)(ii)).

Long Ser­vice Leave Act 1955 (NSW)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is five years (s 4(2)(a)(iii)).

Pro rata pay­ment is only avail­able upon res­ig­na­tion if the res­ig­na­tion is on account of ill­ness, inca­pac­i­ty or domes­tic or oth­er press­ing neces­si­ty” (s 4(2)(a)(iii)).

Long Ser­vice Leave Act 1981 (NT)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is sev­en years (s 10(2)).
Pro rata pay­ment is only avail­able upon res­ig­na­tion if the res­ig­na­tion is:

  • on or sub­se­quent to attain­ing the age at which he or she may retire” (s 10(2)(a)); or

  • on account of ill­ness, inca­pac­i­ty or domes­tic or oth­er press­ing neces­si­ty of such a nature as to jus­ti­fy so ceas­ing to be an employ­ee” (s 10(2)(c)).

Indus­tri­al Rela­tions Act 2016 (QLD)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is sev­en years (s 95(3)).
Pro rata pay­ment is only avail­able upon res­ig­na­tion if the res­ig­na­tion is because of:

  • the employee’s ill­ness or inca­pac­i­ty”; (s 95(4)(b)(i)); or

  • a domes­tic or oth­er press­ing neces­si­ty” (s 95(4)(b)(ii)).

Long Ser­vice Leave Act 1987 (SA)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is sev­en years (s 5(3)).

Pro rata pay­ment is avail­able upon res­ig­na­tion unless the con­tract of ser­vice is unlaw­ful­ly ter­mi­nat­ed by the work­er” (s 5(4)(b)). This exclu­sion, it would seem, cov­ers a sit­u­a­tion where the work­er fails to pro­vide ade­quate notice.

Long Ser­vice Leave Act 1976 (TAS)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is sev­en years (s 8(2)(b)), (or 5 years in the case of min­ing employ­ees (s 8A(2)(b)).

Pro rata pay­ment is avail­able upon res­ig­na­tion if the res­ig­na­tion is:

  • in respect of an employ­ee who attains the age for retire­ment” (s 8(3)(a), s 8A(3)(a)) which includes some­one eli­gi­ble for a ser­vice pen­sion under the Vet­er­ans’ Enti­tle­ments Act 1986 (Cth) (s 8(3A), s 8A(3A));

  • on account of ill­ness of such a nature as to jus­ti­fy the ter­mi­na­tion of that employ­ment” (s 8(3)(b), s 8A(3)(b)); or

  • on account of inca­pac­i­ty or domes­tic or oth­er press­ing neces­si­ty of such a nature as to jus­ti­fy the ter­mi­na­tion of that employ­ment” (s 8(3)(c), s 8A(3)(c)).

Long Ser­vice Leave Act 1992 (VIC)

The min­i­mum peri­od of con­tin­u­ous ser­vice to receive pro rata long ser­vice leave pay­ment is sev­en years (s 58(1)).
The enti­tle­ment is not affect­ed by the rea­son for ter­mi­na­tion of employment.

Long Ser­vice Leave Act 1958 (WA)

The min­i­mum peri­od of con­tin­u­ous ser­vice required to poten­tial­ly enti­tle an employ­ee to receive pro rata long ser­vice leave pay­ment (in the con­text of res­ig­na­tion) is sev­en years (s 8(3)).

There is an exclu­sion from enti­tle­ment where the employ­ment is ter­mi­nat­ed for seri­ous mis­con­duct (s 8(3)(b)). How­ev­er, it would appear that res­ig­na­tion for any rea­son would enti­tle an employ­ee to pay­ment for pro rata long ser­vice leave.

Sum­ma­ry of legislation

ACT, NSW, NT, QLD and TAS all con­tain exclu­sions from the enti­tle­ment to pro rata long ser­vice (if res­ig­na­tion occurs with­in a par­tic­u­lar peri­od of ser­vice) where the res­ig­na­tion is for a rea­son oth­er than ill­ness, inca­pac­i­ty or domes­tic or oth­er press­ing neces­si­ty (or broad­ly sim­i­lar wording).

The courts’ approach to res­ig­na­tions because of domes­tic or oth­er press­ing necessity”

Hav­ing reviewed the leg­is­la­tion we now turn to con­sid­er the courts’ approach to res­ig­na­tions claimed to be by rea­son of domes­tic or oth­er press­ing neces­si­ty”.

Exam­ples of res­ig­na­tions which have held to have been to be for domes­tic or oth­er press­ing neces­si­ty include:

  • a preg­nant employ­ee leav­ing work to take on the respon­si­bil­i­ty of home duties” (Don­nel­ly v South Mait­land Rail­way Pty Ltd 1964 AILR 450)

  • an employ­ee forced to leave work to take care of a sick wife or take care of chil­dren (Franks v Kem­bla Equip­ment Co Pty Ltd 1969 AILR 55 (Franks’))

  • chang­ing jobs to lessen trav­el expens­es when in dif­fi­cult finan­cial sit­u­a­tion (Cren­nan v Oliv­er Fur­ni­ture Pty Ltd (1962) 17 IIB 799 (Cren­nan’))

  • the tak­ing of a high­er paid job to cope with increas­ing finan­cial com­mit­ments (Eyles v Cook (1967) 13 FLR 42 (Eyles’))

  • leav­ing a job because the night shift has become a strain on the employee’s fam­i­ly rela­tion­ships and repeat­ed requests for a trans­fer to the day shift had not been met (Williams v MacArthur Press (Sales) Pty Ltd 1990 AILR 137(14))

  • leav­ing employ­ment because the employ­er was relo­cat­ing and the employ­ee would have been required to dri­ve two hours each way to and from work, and the employ­ee was not pre­pared to move hous­es or to require her hus­band to change jobs (Ker­shaw v Elec­tric­i­ty Com­mis­sion of NSW 1991 AILR 91(7)).

In Robert John Ver­meer v Mon­tague Fresh Qld Pty Ltd (2007) 185 QGIG 220 Brown C adopt­ed the dic­tio­nary def­i­n­i­tion of domes­tic” mean­ing of or per­tain­ing to the home, the house­hold or house­hold affairs.”

In Ahern v IA Group Pty Ltd [2014] QIRC 31 (Ahern’) at para 60, Black IC held that an employee’s res­ig­na­tion pur­port­ed­ly for rea­sons includ­ing the need to rekin­dle his rela­tion­ship with his ex wife can­not appro­pri­ate­ly be defined as per­tain­ing to the home or house­hold affairs.”

Giv­en that the rel­e­vant leg­is­la­tion makes pro­vi­sion for res­ig­na­tion for oth­er press­ing neces­si­ty” it would seem pru­dent for employ­ees seek­ing to rely on res­ig­na­tion for a domes­tic” rea­son to argue (in the alter­na­tive) that the rea­son is also a press­ing neces­si­ty”.

The test in AWU v Sun­shine Coast Pri­vate Hos­pi­tal [2003] QIR Comm 241 (‘Sun­shine Coast’)

In Sun­shine Coast the court drew on the pre­vi­ous judg­ments of British Motor Cor­po­ra­tion v Chance [1965] AR (NSW) 364 and the Full Bench deci­sion in Com­put­er Sci­ences of Aus­tralia Pty Ltd v Leslie [1983] AR (NSW) 828 to pose six ques­tions rel­e­vant to deter­min­ing whether a resign­ing employ­ee was enti­tled to pro rata long ser­vice under the rel­e­vant sec­tion of the QLD legislation:

1. Was the rea­son for the ter­mi­na­tion one which fell with­in the sec­tion?
2. Was the rea­son gen­uine and not sim­ply a ratio­nal­i­sa­tion of anoth­er rea­son which did not fall with­in the sec­tion; or a rea­son that while hav­ing the appear­ance of truth or right, is in real­i­ty a pre­tence or a decep­tion; or a friv­o­lous rea­son?
3. Although the rea­son claimed may not be the sole ground which caused the employ­ee to make a deci­sion to ter­mi­nate his or her employ­ment, was it the real or moti­vat­ing rea­son?
4. Did the rea­son claimed cause the employ­ee to ter­mi­nate his or her employ­ment?
5. Did the rea­son claimed affect the employ­ee in rela­tion to the par­tic­u­lar ser­vice he or she ter­mi­nat­ed?
6. Was the sit­u­a­tion which the employ­ee was in at the point of the ter­mi­na­tion, one in which a rea­son­able per­son might have felt com­pelled to seek to resolve by ter­mi­nat­ing his or her employment?”

This test has been fol­lowed in sub­se­quent deci­sions includ­ing in one of the most recent deci­sions on the top­ic in NSW: Stock­well Inter­na­tion­al Pty Ltd v Solyali [2014] NSWIC 7.

From the six ques­tions posed in the test in Sun­shine the fol­low­ing points emerge:

  • As to the require­ment that domes­tic or oth­er press­ing neces­si­ty” is the gen­uine rea­son for the res­ig­na­tion, it is clear that courts do not take asser­tions about the rea­sons for res­ig­na­tions at face val­ue. In Ahern (one of the most recent cas­es on this ques­tion), part of the rea­son for the court dis­miss­ing Mr Ahern’s claim was that he did not dis­close the pur­port­ed rea­son for his res­ig­na­tion at the time of his res­ig­na­tion or in dis­cus­sions that led to the res­ig­na­tion. It was lat­er claimed to be for rea­sons includ­ing the effect of his job on his health and efforts to rekin­dle his rela­tion­ship with his ex wife. That led the court to infer that this was not the gen­uine rea­son for res­ig­na­tion. That is not to say that it is always nec­es­sary for an employ­ee to state the rea­son for the res­ig­na­tion at the time they resign (see for exam­ple: Franks, men­tioned above, where the court not­ed of the for­mer employ­ee “…it may well have been that, in exer­cis­ing his legal right to ter­mi­nate his employ­ment, he felt no oblig­a­tion to be forth­com­ing or even frank with the man­ag­ing director”.

  • The ques­tion posed at num­ber 3 (moti­vat­ing rea­son) makes clear that the domes­tic or oth­er press­ing neces­si­ty” does not have to be the sole rea­son for res­ig­na­tion. There are a num­ber of cas­es where an employ­ee has resigned to take on a dif­fer­ent job. If the rea­son for obtain­ing the new job was itself a domes­tic or oth­er press­ing neces­si­ty” the fact that oth­er fac­tors may have been present should not defeat a claim for pro rata long ser­vice leave (see for exam­ple: Cren­nan and Eyles, men­tioned above).

  • The ques­tion posed at num­ber 6 indi­cates that a rel­e­vant fac­tor to be con­sid­ered is not only whether the employ­ee felt com­pelled to leave their employ­ment but also whether it was rea­son­able for the employ­ee to seek to resolve the issue through res­ig­na­tion. In this sense, this par­tic­u­lar cri­te­ri­on intro­duces a lev­el of objec­tiv­i­ty in the over­all test.

For advice on long ser­vice leave please con­tract Richard Ott­ley or Simon Obee.