Public holidays during stand down – to pay, or not to pay?

We are aware that there is inconsistent advice circulating as to whether permanent employees lawfully stood down under the stand down provisions in Part 3 – 5 of the Fair Work Act 2009 (Act) are entitled to be paid for public holidays that occur within the period of the stand down.

For the reasons explained, we are of the view that an employee lawfully stood down under Part 3 – 5 of the Act is not entitled to be paid for public holidays that occur within the stand down, whether or not the public holiday falls on a day of the week that the employee would have otherwise worked.

This advice applies to employees whose entitlement to be paid for public holidays derives from the National Employment Standards in the Act and not from an employment contract or enterprise agreement.

The entitlement to payment for public holidays not worked is derived from s 116 of the Act, which provides as follows:

116 Payment for absence on public holiday

If, in accordance with this Division, an employee is absent from his or her employment on a day or part-day that is a public holiday, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work on the day or part-day.

Note: If the employee does not have ordinary hours of work on the public holiday, the employee is not entitled to payment under this section. For example, the employee is not entitled to payment if the employee is a casual employee who is not rostered on for the public holiday, or is a part-time employee whose part-time hours do not include the day of the week on which the public holiday occurs.

(Our underlining)

The intention of this section is clear. If an employee would have otherwise worked ordinary hours on the public holiday, but for the fact the day was a public holiday, the employee is entitled to be absent and paid at his or her base rate of pay for their ordinary hours on that day. The Note under s 116 makes this clear in relation to part-time employees who would not normally work ordinary hours on the day of the public holiday.

The Explanatory Memorandum published with the Fair Work Bill 2008 takes this point further and contains three useful examples of when an employee is entitled to be paid for public holidays not worked. Relevantly, the last example sets out as follows:

Another employee, Holger is on unpaid parental leave for the first half of 2010. Holger would not be entitled to payment for the public holiday on 26 January 2010.

The opening words of s 116 above (underlined) make clear that this entitlement only applies if the employee is absent from work in accordance with their right to be absent from work on a public holiday under s 114 of the Act. The purpose of s 116 of the Act is to ensure that an absent employee does not lose a day’s pay because of the public holiday.  When an employee is lawfully stood down under the Act, the employee is not absent from work because of his or her right to be absent under s 114 and the day being a public holiday.  In the case of a lawful stand down, the permanent employee is absent from work because of and in accordance with, stand down provisions outlined in a different Division in the Act.

While the law on this point is untested, in our view, the logical interpretation of these competing provisions is that a permanent employee lawfully stood down without pay should not, unless the employer chooses to make payment, be paid for public holidays that occur within the period of the stand down.

This is general advice only and not specific to any circumstance.  You must get advice specific to your situation as individual cases may have peculiar facts that affect the outcome for your business.