McFarlane-Smith v ICAP Australia

McFarlane-Smith v ICAP Australia concerned a dispute between an employee, McFarlane-Smith, and their employer, ICAP Australia. Following McFarlane-Smith's resignation, ICAP Australia placed the employee on garden leave and subsequently directed them to take four of their eight accrued weeks of annual leave. The employee challenged this direction. The matter was heard by Judge McNab.

The central legal issue before the court was whether the employer's direction for the employee to take annual leave during a period of garden leave, following the employee's resignation, was a valid exercise of its contractual rights. Specifically, the court had to determine if the employment contract permitted the employer to mandate the use of accrued annual leave in such circumstances, notwithstanding the employee's notice of resignation and placement on garden leave.

Judge McNab reasoned that the employment contract expressly entitled the employer to direct the employee to take annual leave. The court found that this contractual right was not extinguished by the employee's resignation or the subsequent placement on garden leave. Therefore, the employer's instruction to take four weeks of accrued annual leave was a valid exercise of its contractual power. The court ordered that the employee was required to take the directed annual leave.