McFarlane-Smith v ICAP Australia

[2018] FCCA 4024

FEDERAL CIRCUIT COURT OF AUSTRALIA

MCFARLANE-SMITH v ICAP AUSTRALIA [2018] FCCA 4024

Catchwords:
INDUSTRIAL LAW – Garden leave – where the employer instructed the employee to take annual leave – where the employee had put in notice of resignation – where the employee was placed on garden leave prior to the employer directing the employee to use annual leave – where the employment contract entitled the employer to direct the employee to take annual leave – where the direction to take annual leave was to take four (4) of the eight (8) accrued weeks of annual leave.

Legislation:

Fair Work Act 2009 (Cth), ss.94(5) and 94(6)

Applicant: LUKE MCFARLANE-SMITH

Respondent: ICAP AUSTRALIA

File Number: MLG 871 of 2018

Judgment of: Judge McNab

Hearing date: 6 June 2018

Date of Last Submission: 6 June 2018

Delivered at: Melbourne

Delivered on: 6 June 2018

REPRESENTATION

The Applicant appearing in person

Counsel for the Respondent: Mr Pollock of Counsel

Solicitors for the Respondent: Herbert Smith Freehills

ORDERS

1. The application filed 4 April 2018 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 871 of 2018

LUKE MCFARLANE-SMITH

Applicant

And

ICAP AUSTRALIA

Respondent

REASONS FOR JUDGMENT

(DELIVERED EX-TEMPORE – REVISED FROM TRANSCRIPT)

1. This matter concerns the employment of the applicant, Mr McFarlane-Smith. Mr McFarlane-Smith was employed as a broker with ICAP Australia (‘the company’) between 31 March 2008 and 1 February 2018.

2. At the commencement of Mr McFarlane-Smith’s employment, he entered into a contract of employment (‘the Employment Contract’) which contained Terms and Conditions relating to annual leave and long service leave.

3. Clause 4.2 of the Terms and Conditions of the Employment Contract provided:

   You acknowledge that, subject to applicable law, in accordance with the applicable legislation, the Company may direct you to take annual leave, including but not limited to during any period of notice or Garden Leave.

4. The company’s right to place a person on ‘Garden Leave’ is found in clause 4.4:

   Each day of any unused holiday entitlement shall, if required by the Company and subject always to applicable law. be taken by you during any period of notice and shall in any event be deemed to have been so taken by you for each day that the Company exercises its rights to place you on Garden Leave.

5. The evidence given in this matter is to the effect that on 19 July 2017, Mr McFarlane-Smith gave six months’ written notice of his resignation from his employment with ICAP Australia. Mr McFarlane-Smith’s resignation was to be effective from 1 February 2018.

6. ICAP Australia did not immediately direct Mr McFarlane-Smith to take Garden Leave. However, from 31 October 2017, Mr McFarlane-Smith was advised in writing that he was not required to attend the offices from that date until the termination of employment on 1 February 2018. The applicant does not contest the company’s entitlement to give that direction in accordance with the Employment Contract.

7. By a letter dated 7 December 2017, ICAP Australia advised that having regard to the applicant’s excessive annual leave accrual, the applicant was required to take a period of paid annual leave between 2 January 2018 and 1 February 2018, being 20.5 business days.

8. The applicant was left with an accrued annual leave balance of 20 days as at 1 February 2018.

9. The applicant asserts that the direction to take annual leave was unreasonable and refers to section 94(5) of the Fair Work Act 2009 (Cth) (‘the FW Act’).

10. Section 94(5) of the FW Act provides:

    (5) An employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable.

11. The notation to that section provides:

    Note: A requirement to take paid annual leave may be reasonable if, for example:

    (a) the employee has accrued an excessive amount of paid annual leave; or

    (b) the employer’s enterprise is being shut down for a period (for example, between Christmas and New Year).

12. Importantly, section 94(6) of the FW Act also provides:

    (6) An employer and an award/agreement free employee may agree on when and how paid annual leave may be taken by the employee.

13. The parties in this matter have agreed that ICAP Australia may direct the employee to take annual leave including, but not limited to, during any period of notice or Garden Leave. This is precisely what ICAP Australia has done in this matter.

14. ICAP Australia was entitled both pursuant to clause 4.2 of the Employment Contract and section 94(5) of the FW Act to issue that direction even in circumstances where there was no such agreement between the parties, subject to the requirement being reasonable.

15. It is plainly reasonable for the employer to direct the employee to take annual leave during the period of Garden Leave in circumstances where the applicant had accrued slightly in excess of 40 days accrued annual leave when he was employed on a salary of about $280,000 per annum.

16. Forty days of accrued annual leave is a significant amount of leave to have, and the employer is entitled to manage the business to bring the level of accrued annual leave under control. The employer acted reasonably in directing the employer to take a portion of the leave he had accrued. I note that Mr McFarlane-Smith retained around four weeks of accrued annual leave at the conclusion of his employment on 1 February 2018.

17. In those circumstances, I dismiss the application.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge McNab

Associate:  

Date:  17 December 2019