Leave without pay (LWOP) is not uncommon among businesses and organisations. Usually, an employer and employee agree for the employee to take time off with no pay when the employee has used all of their other paid leave options, such as annual leave.

However, things can become complicated when it comes to LWOP and public holiday pay. If an employee is taking leave without pay over a period that includes a public holiday, should they get paid or not?

Case in point: A full-time employee on extended leave

Let’s consider the case of an employee on an extended overseas holiday of five months, which consisted of paid annual leave, paid long service leave, and leave without pay (LWOP).

In this scenario, the Easter period falls within the employee’s period of leave without pay. Should the employee be paid for the Easter public holidays?

Let’s assume the employee is full-time and the ordinary hours under their contract of employment are Monday to Friday inclusive.

Would the employee be right to claim payment for the public holidays because the holidays fell on days he would normally work? Or would the employer be right because the employee is not absent on a form of paid leave?

Does the LWOP employee get paid for the public holiday?

The entitlement to payment for a public holiday, while an employee is absent on leave without pay, has been the subject of conjecture over the years.

There is surprisingly little case law on this issue, probably because LWOP under the above circumstances is not generally an employee right under a statute, industrial instrument or contract of employment, but is only available upon the consent of the employer.

The Fair Work Act 2009 does not specifically provide for this circumstance.

Under s116 of the Act, an employer must pay an employee’s base rate of pay for the employee’s “ordinary hours of work” on the day.

Where an employee has requested LWOP, it is implied the employee does not have any ordinary hours of work for the period of the LWOP.

Public holidays would not seem to relate to the meaning of ‘service’ and ‘continuous service’ under s22 of the Fair Work Act, the definition of which does not recognise an absence of unpaid leave or unpaid authorised leave, except under specific circumstances.

Suspension of contract

In the above scenario, the general view is the employee does not have an entitlement to payment for the public holidays that fell during the period of LWOP, because the employee sought permission from the employer to take the unpaid leave, which has the effect of ‘suspending’ the contract of employment.

LWOP public holidays: Requested or directed?

The important distinction appears to be that the employee requested the LWOP and it was not made under any duress by the employer. 

For example, an employee may be entitled to payment for a public holiday that falls during LWOP where it occurs at the direction of the employer.