Managing people

Can you dismiss someone who is on annual leave?

Sacking an employee while they are on annual leave is not a good idea. Find out more about the rules of termination here.

23 November 2022

When you decide to dismiss an employee, it’s important you follow a fair and proper process. And that does not include sacking someone while they are on annual leave.

Let’s look at an example. An employee is absent on four weeks' annual leave. He has received several warnings during his two years of employment and is on a final written warning. The employer discovers the employee has transgressed on the same issue and wants to send a letter of termination to his home address. Is this allowed?

Termination

While this circumstance is not considered by the Fair Work Act, or in awards or agreements, generally the answer is no. The employer would need to wait until the employee returns from annual leave before giving notice of termination of employment (or payment in lieu). The right of an employer to terminate an employee absent on paid leave is dependent on the type of leave.

Industrial tribunals have usually determined that notice of termination by an employer will not be effective if it seeks to terminate an employee’s employment prior to, or at the same time as, a previously granted period of annual leave. See Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and others v Silcar Pty Ltd[2013] FWC 856.

In this case, the Fair Work Commission used an example to illustrate the point. "For example, if an employer gives an employee four weeks’ notice of termination and after one week the employee is on approved annual leave for two weeks and returns to work out the notice for one week, then the two weeks on annual leave must be absorbed by the notice period and the employee re-credited with the annual leave or they must be given an additional period of notice.”

The FWC established that the right to notice and the right to annual leave are independent and cannot be used to cancel out the other right.

Another potential issue for an employer, in terminating an employee due to misconduct or poor performance while they are absent on annual leave, is complying with the procedural fairness requirements under unfair dismissal law. This may result in an employee not being given the opportunity to defend the employer's allegations and a denial of natural justice.

Personal/carer’s leave

While notice cannot be given during a period of paid annual leave, this may differ when an employee is absent on personal/carer’s leave.

Industrial tribunals have usually determined that an employer is entitled to give notice to an employee because the period of such leave is necessarily uncertain. However, this may differ where the employee is absent on a quantified period of sick leave.

It should be noted an employer should not terminate an employee on the grounds the employee is absent on personal/carer’s leave: the employee could bring a claim of unlawful dismissal to the FWC on the grounds the dismissal was due to the temporary absence from work of the employee due to personal illness or injury.

The bottom line: Generally, an employer is not permitted to give notice to an employee during a period of annual leave. If notice is given during that period, the period of notice will not commence until the employee returns to work from annual leave.

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