Employers must pay annual leave on termination at the same level of payment that the employee would have received had they taken the annual leave while employed – regardless of the terms of any enterprise agreement, the court found.

Centennial was in dispute with the Construction Forestry Mining and Energy Union over the amount of annual leave benefits to be paid to some 58 employees who were made redundant with the closure of the Newstan coal mine in New South Wales.

“Centennial contented, that where there is accrued but untaken leave, in addition to their ordinary weekly rate of pay employees are only entitled to receive payment for their ‘average bonus’ and, in contrast to what happens when annual leave is taken during the employment, there is no component for rostered overtime, shift allowances, weekend penalty rates or leave loadings,” according to the judgement documents.

It relied for this proposition on the terms of clause 19 of the Centennial Northern Mining Services Enterprise Agreement 2011.

The union successfully argued that clause 19 contravened Section 90 (2) of the Fair Work Act and was therefore invalid.

A spokeswoman for Centennial told ICN: “Centennial accepts the decision of the Federal Court”