[2012] FWA 9634

Download Word Document



Fair Work Act 2009
s.394—Unfair dismissal

Standard & Poor’s (Australia) Pty Ltd



Jurisdiction – minimum employment period.

[1] L.M. (Applicant) has made an application under s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for unfair dismissal from Standard & Poor’s (Australia) Pty Ltd (Respondent). The Applicant was supported by Ms Carryl Fenner and the Respondent was represented with leave by Mr Jack Tracey. L.M. opposed leave being granted. I granted leave on the basis that the case largely depended upon the proper interpretation of the Act and not the contest of evidence and consequently I did not consider that there would be unfairness to the Applicant and that the matter would proceed more efficiently.

[2] There is no dispute that the employer is a national system employer of more than 15 full time equivalent employees. There is no dispute that the Applicant commenced employment with the Respondent on 1 February 2011 and was dismissed at the initiative of the employer on 23 July 2012. There is no dispute that this constitutes a period of continuous service. There is no suggestion that the termination was for reasons of redundancy. The Applicant is protected from unfair dismissal under the Act (s.382) if it is established that she had at least 6 months continuous service with the Respondent.

[3] It is also not in contention that the period of time during the period of continuous service that the Applicant was working or on authorised paid leave totalled four months and three weeks. It is accepted that the Applicant suffered from a prolonged illness which prevented her from attending work during the remaining period and the Applicant provided medical certificates for her periods of absence. The Applicant did not work at all between early August 2011 and her termination in July 2012. During much of the period of unpaid absence the Applicant did receive income protection insurance payments. The income protection policy was associated with her employment with the Respondent but the payments to the Applicant were made pursuant to the policy by the private insurer through the superannuation fund of which the Applicant was a member. Consistent with the insurance policy, payments ceased 60 days after her termination. The insurance policy was linked to the Applicant’s membership of the Standard and Poor’s Superannuation Fund and a successor AMP Fund and the premiums were paid by the Respondent.

[4] I am satisfied that the unpaid absence of the Applicant was authorised by the Respondent.

[5] The Applicant submitted that she was advised by the employer that she had satisfactorily completed the six month probation period specified in her contract of employment. The Applicant also submitted that she received four weeks pay in lieu of notice consistent with the contract of employment and not the two week’s pay provided for in her contract of employment applicable to termination during the period of probation. In my view this is not relevant. Whether or not the period of authorised unpaid absence or authorised unpaid leave counts towards the completion of six months continuous service is a matter determined by the Act.

[6] There is no dispute that if more than five weeks of the period of authorised unpaid absence does count towards the length of the period of continuous service then the Applicant had at least six months continuous service and she is protected from unfair dismissal. There is also no dispute that if that minimum period of authorised unpaid absence does not count towards the length of the period of continuous service then the Applicant is not protected from unfair dismissal and the case must be dismissed.

[7] The period of employment for the purposes of unfair dismissal jurisdiction is defined in Section 384 as follows:

[8] The term continuous service is defined in s.22 of the Act. The Explanatory Memorandum for the Fair Work Bill 2008 at paragraph 103 states that “Clause 22 defines the meaning of service and continuous service in general terms that apply to the Bill as a whole (including the NES), and also in the specific context of identified Divisions of the NES where a particular meaning is required.” There is no alternative definition of service or continuous service associated with Part 3-2 of the Act which deals with unfair dismissals and hence there is no doubt that Section 22 applies. The relevant part of Section 22 is as follows:

[9] I am satisfied that for the reasons that follow that there are no regulations which have been made for the purpose of paragraph 2(c) or 2(b)(iii). The Applicant argued to the contrary.

[10] The Applicant argued that I should have regard to Regulation 3.01 and 6.04 Temporary Absence – illness or injury (Fair Work Regulations 2009).

[11] Regulation 6.04 is in relevant terms identical to Regulation 3.01 save that it commences as follows:

[12] Regulation 3.01 defines the kinds of illness or injury which can be taken into account for the purposes of s.352 of the Act which prohibits the dismissal of an employee because that employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations. This regulation is specifically “for s.352 of the Act”. Further s.352 of the Act is in a different Part of the Act; namely Part 3-1 General Protections not Part 3-2 Unfair Dismissal. I can see no basis for an argument that Regulation 3.01 is a regulation which prescribes periods of unpaid leave or unpaid authorised absence which are exempted from Section 22(2)(b). Regulation 3.01 does not mention the term “unpaid leave or unpaid authorised absence”. Regulation 6.04 is similarly of no relevance because it is for the purposes of Section 772 of the Act and again that Section is in a different Part of the Act.

[13] The Full Bench in Workpac Pty Ltd v Babach ((2012) FWAFB 3206 at paragraph 29) reached the conclusion that “No regulations have been made pursuant to s.22(2)(b)(iii) or (c)”

[14] Hence the matter comes down to a question: Is the period of absence due to the illness a period of unpaid leave or unpaid authorised absence?

[15] In Webster v Toni and Guy Port Melbourne [2010] FWA 4540 I considered the issue where an applicant was paid by the Transport Accident Commission.

[16] The Full Bench in Workpac Pty Ltd v Babach ((2012) FWAFB 3206) approved my earlier decision but found that absence on workers’ compensation was not an unpaid authorised absence within the meaning of s.22(2)(b).

[17] It is necessary to consider if the finding of the Full Bench that “the fact that the payments were made pursuant to a legal obligation upon the employer is the critical consideration” means that the payment pursuant to income protection insurance, the premium for which is paid by the employer, results in the period of absence for which the employee receives payment as a result of the insurance being regarded as a period of paid authorised absence.

[18] In the circumstances of this case there is a legal obligation upon the Respondent to pay superannuation on behalf of the Applicant. However, the legal requirement to pay superannuation does not include any obligation to pay income protection insurance.

[19] In the circumstances of this case the common law contract of employment provides (Attachment to the Statement of the Applicant) that the Applicant has a right to choose her superannuation fund. The contract provides that if, and only if, the Applicant chooses the Standard & Poor’s Superannuation Fund then the company will pay insurance in that fund which will provide for temporary disability cover of up to 75% of gross salary for up two years.

[20] There is no legal obligation on the Respondent pursuant to an employment related law or instrument to make the payments the Applicant is receiving. In particular there is no obligation under an Award or collective agreement for payments to be made to the Applicant for the periods of absence due to illness in this case. The circumstances are clearly distinguishable from a situation such as workers compensation payments. I am satisfied that the fact that payments were made pursuant to income protection insurance under such a common law contract does not, in the circumstances of this case, make the absence a paid absence or a period of paid leave.

[21] The Full Bench also emphasised the relationship between work and the absence in the case of workers compensation. Such a link is not present in the case of unpaid authorised absence due to illness.

[22] The Respondent argues that if the period of unpaid authorised absence was to count towards the minimum employment period then this would defeat the purpose of the legislation which they say is to allow the employer fair opportunity to assess the suitability of the employee. I do not regard this as a strong argument for the following reasons advanced by the Full Bench in Workpac.

[23] I consider that the period when the Applicant was absent due to illness during which she was not entitled to paid leave must be regarded as a period of unpaid leave or unpaid authorised absence. There is no legal obligation such as under an Award or collective agreement or other employment related legislation which required payments to be made to the Applicant. The payments made due to income protection insurance were not pursuant to any such obligation.

[24] For these reasons I find that the Applicant did not have the minimum 6 month period of continuous service and hence does not have access to unfair dismissal protection. The jurisdictional objection of the Respondent is upheld and the application for an unfair dismissal remedy is dismissed. I order accordingly.



Ms C Fenner appeared on behalf of the Applicant.

Mr J Tracey appeared on behalf of the Respondent

Hearing details:



November 12

Printed by authority of the Commonwealth Government Printer

<Price code C, PR531278>