In a decision that provides welcome clarification for employers navigating the blurry edges of personal leave entitlements, the Fair Work Commission (FWC) has handed down its decision in Australian Workers’ Union v Cement Australia Pty Limited T/A Cement Australia [2025] FWC 137.
The case turns on whether an employee was entitled to use personal leave during a 10-week recovery from elective surgery, and more importantly, whether the employer could lawfully refuse that request, in light of previous high absenteeism.
The answer? Yes, it could.
The facts
The Applicant, a long serving mine operator employed by Cement Australia covered by the Cement Australia Gladstone Union Collective Agreement 2022 (the Agreement), underwent elective knee surgery in May 2024, prior to his planned retirement taking place in August 2024. He requested three months’ paid personal leave to recover from the surgery.
However, the Employer, Cement Australia, in considering the Employee’s prior history of excessive sick leave, declined to approve more than a single day of leave, relying upon the Excessive Personal/Carer’s Leave Absenteeism clause of the Agreement.
In the preceding year to this request, the Employee had taken 58 days of personal leave. When Cement Australia compared the Employee’s total hours of personal leave taken during his duration of service with Cement Australia and compared it to the National Employment Standards (NES), the Employee was in a deficit of 1,500 hours. Cement Australia told the Employee to use annual leave, long service leave, or take unpaid leave for the requested period.
The Australian Workers’ Union (AWU), acting on the Employee’s behalf, lodged a dispute under s739 of the Fair Work Act 2009 (Cth) (FW Act), arguing that Cement Australia had misapplied the Agreement and unlawfully withheld leave.
The legal landscape
Under the NES, employees (other than casuals) are entitled to 10 days of paid personal/carer’s leave per year for illness or injury. However, this entitlement can be supplemented by an enterprise agreement, as was the case here, with the Agreement offering generous unlimited paid personal leave access, albeit with caveats.
The Agreement sets out a framework for personal leave use, and while it affirms generous access to paid leave for genuine illness or injury, it also empowers the Employer to:
- monitor high levels of absenteeism;
- counsel or discipline employees who display patterns of misuse; and
- review and, if necessary, cease payment for further leave where concerns persist.
Notably, the Agreement contains provisions that allows for a review after three months of continuous personal leave to determine whether payment should continue.
The AWU’s position
The AWU’s primary argument was one of timing and process: Cement Australia had jumped the gun.
According to the AWU, the Employer could not decline personal leave pre-emptively. Rather, it needed to approve the leave first and only later review the appropriateness of continued payment once three months had passed. The AWU asserted that the Employee had a genuine need for leave and that any concern about excessive use should have been addressed through post-facto review, not upfront refusal.
Cement Australia’s defence
Cement Australia’s position was pragmatic, it had already counselled the Employee in December 2023 about his extensive sick leave. That was, in its view, sufficient to activate its right under the Agreement to justify denying further paid leave for an elective procedure, especially one immediately preceding his anticipated retirement.
They stressed that the Agreement does not create an unqualified right to take unlimited paid personal leave. Cement Australia viewed the Excessive Personal Leave Absenteeism clause in the Agreement as a proactive tool, not a retrospective one, allowing them to refuse future paid leave based on past conduct, provided the Employee has been appropriately warned.
The FWC’s findings
Commissioner Hunt agreed with Cement Australia’s argument. Key takeaways from the ruling include:
- The Agreement allowed pre-emptive refusal of paid personal leave, where the Employee has been counselled for high absenteeism. It is not necessary to wait until leave has been taken to make that call.
- The three-month review clause under the Agreement is a separate mechanism, it only applies to assessing whether continuation of already-approved leave remains appropriate. It does not override the Employer’s discretion.
- The elective nature of surgery is irrelevant, as the Commissioner noted that “Employees are entitled, pursuant to the NES to take paid leave from work whether any medical treatment is planned or elective”. Elective procedures, including cosmetic surgeries, may still qualify, provided there is a genuine incapacity to work and supporting medical evidence.
- Intent to retire may be relevant, but only as part of a broader assessment or in considering whether a return to work is likely.
The FWC ultimately held that Cement Australia had acted lawfully in refusing paid personal leave, having properly invoked its rights under the Agreement and given the Employee fair warning.
Key takeaways from the Decision
The Cement Australia decision is a timely reminder that while personal leave entitlements under enterprise agreements may exceed the NES, they are rarely without limits.
Here are the practical lessons for employers:
- Agreements do not need to be toothless: If your enterprise agreement includes a provision to manage excessive leave, use it, but follow due process. Document counselling and make it clear that future entitlements may be affected. Had Cement Australia failed to counsel the Employee, the decision of the FWC may have been very different.
- Set expectations early: If an employee has a pattern of high absenteeism, don’t wait for another leave request to raise concerns. Formal correspondence that flags a potential cessation of paid leave strengthens your position and reinforces the company’s position to the employee and, if relevant, the union.
- Leave denial must be based on genuine grounds: Even with discretion, employers should have a solid evidentiary basis (e.g. excessive leave history, failure to engage in return-to-work processes) for denying personal leave, especially when there’s medical evidence of incapacity.
- Elective procedures are still ‘sick leave’: Don’t assume you can deny sick leave just because the procedure is elective. If the recovery renders the employee unfit for work, and they’ve supplied evidence, the NES and most agreements will entitle them to paid leave, unless other enterprise agreement clauses (like the excessive absenteeism clause in this Agreement) apply.
In short, employers can say no to sick leave, but only if the enterprise agreement or other industrial instrument says so, and you’ve followed the required procedural processes. We’re sure Cement Australia breathed a sigh of relief when this decision was released and that there is no doubt that they will be bargaining in all future enterprise agreements to keep the Excessive Absenteeism clause in.
The views expressed in this article are general in nature only and do not constitute legal advice. Please do not hesitate to contact us if you require specific advice tailored to the needs of your organisation in relation to the implications of these changes for your organisation.