Resignation and Pro Rata Long Service Leave
by Simon Dewberry
The Queensland legislationa pregnant employee leaving work to take on the responsibility of home duties;
Employees in Queensland who resign after seven years' service are entitled to a pro rata long service leave payment only if they resign for reasons of illness, incapacity, death or other pressing necessity. A payment should not be made to employees resigning for any other reason.
This entitlement exists in a number of other Australian jurisdictions. However, as in other Australian jurisdictions, the terms 'illness', 'incapacity', or 'domestic or other pressing necessity' are not defined and have been the subject of debate on a number of occasions.
The difficulty for employers is anticipating whether the circumstances of a particular employee will be considered by the Queensland Industrial Relations Commission (the Commission) as falling within the set criteria. The general thrust of case law on this point is that employees ceasing work for reasons beyond their effective control are entitled to the benefit.
The words 'domestic or other pressing necessity' have been interpreted to encompass a broad range of scenarios, including:
an employee forced to leave work to take care of a sick spouse, or take care of children;
an employee changing jobs to lessen travel expenses when in a difficult financial situation;
an employee leaving a job because working night shifts had become a strain on the employee's family relationships and repeated requests for a transfer to the day shift had not been granted; and
an employee leaving employment because the employer was relocating and the employee would have been required to travel substantial distances to attend work each day.
Perhaps the low watermark of domestic or other pressing necessity was the 1996 decision of AMACSU v Qantas Airways Ltd. In that case, a Qantas employee became engaged to an American citizen who was unable to relocate to Australia because he was a member of the US Marine Corps. She terminated her employment and submitted a claim for pro rata long service leave payments, citing her intention to move to the US to be married as the reason for her resignation.
Qantas advised that they were not prepared to grant the claim, as her decision to resign did not constitute a domestic or other pressing necessity. In effect, her decision to leave was her choice, and there was no existing 'domestic' relationship. However, the Australian Industrial Relations Commission held, with very little debate, that the employee had no reasonable choice except to terminate her employment and relocate, and recommended payment of pro rata long service leave.
This is an extremely broad interpretation, anticipating both existing domestic arrangements, as well as proposed or future arrangements. A more conservative test, which appears to have been accepted generally, involves the following questions:
1. Was the reason claimed for resigning:
the employee's illness or incapacity?
a domestic or other pressing necessity?
2. Was the reason claimed for termination genuinely held by the worker and not simply a rationalisation?
3. Although the reason claimed may not be the sole ground that actuated the worker in his [or her] decision to terminate, was it is the real or motivating reason?
4. Was the reason such that a reasonable person in the circumstances in which the worker found himself [or herself] placed might have felt compelled to terminate his [or her] employment?
Application of the test in Queensland
This test was applied by the Commission in the AWU v Sunshine Coast Private Hospital, which involved an employee who claimed that he resigned because of illness or incapacity. Most recently, the Commission in Thomson v Pauls applied the test to an employee who claimed that he resigned because of a domestic or other pressing necessity.
Mr Thomson resigned his employment because his parents were moving to Tasmania and he decided to stay with his family. Mr Thomson was a bachelor and had always lived with his parents.
Applying the test, the Commission held that:
1. The reasons advanced by Mr Thomson did not constitute a domestic or pressing necessity. There was, for example, no suggestion of there being a really serious problem in the home, nor was the case analogous to situations where an employee has resigned to be married in another area, or to join their spouse whose employment had been transferred overseas.
2. The reason advanced by Mr Thomson was not the primary, or motivating, reason for his decision to resign. Rather, his decision was to allow him - in conjunction with the rest of his family – to make a lifestyle change.
3. The reasons claimed were not the real or motivating reason for Mr Thomson's resignation. The real or motivating reason was so that Mr Thomson could effect a lifestyle change.
4. A reasonable person in the circumstances in which Mr Thomson found himself would not have felt compelled to terminate their employment for the reasons claimed by Mr Thomson. Elements of choice were involved.
While the cases show that there are a broad range of circumstances in which individuals can claim a pro rata long service leave payment based on a domestic or other pressing necessity, the recent Queensland cases demonstrate that claims will still need to be justified on the evidence, and there is no blanket entitlement. It is not enough that the employee claims to be resigning for one of the relevant reasons. Employers should feel comfortable in scrutinising claims where they believe the reason for the resignation may be other than a domestic or other pressing necessity.