In November 2025, the claimant, who had been employed by the respondent as an Asset Manager in Karratha from April 2014 until December 2024, commenced proceedings in the Industrial Magistrates Court of Western Australia (Court) under the Small Claims procedure alleging that the respondent contravened s 90(2) of the Fair Work Act 2009 (Cth) (the Act) by failing to include various annualised allowances (totalling approximately $61,000 inclusive of superannuation) in the payment of his accrued annual leave and long service leave on termination.

The claimant contended that those allowances (including a location allowance, housing allowance, availability allowance and overtime allowance) were paid when he took annual leave and public holiday leave during his employment and therefore would have been payable had he taken the accrued leave before his employment ended.

The respondent denied that there was a legal obligation in either the employment contract or the enterprise agreement requiring it to pay the allowances during annual leave or long service leave, or to include them in any termination payments. The respondent relied on ss 90(1) and (2) of the Act to support its contention that accrued annual leave is paid out on termination at an employee's base rate of pay (as defined in s 16 of the Act and, relevantly, excluding monetary allowances). The respondent further submitted that because the Long Service Leave Act 1958 (WA) (LSL Act) did not apply to the claimant during his employment pursuant to s 4A(4) of that Act, the payment of LSL was governed by the Agreement, which  provided for the payment of LSL at the base salary rate, exclusive of allowances.

The Court was required to determine whether any of the allowances were payable upon termination for the purpose of calculating accrued and untaken annual and long service leave, and if so, whether there was a legal obligation giving rise to their payment.

In relation to annual leave, the Court considered each allowance separately.

The Court found that the location allowance and housing allowance were payable under both the enterprise agreement and the claimant’s employment contract. These allowances formed part of the claimant’s total remuneration and were intended to compensate employees for the additional costs associated with living and working in regional WA. As the allowances were not confined to periods when the claimant was actively working and, if paid annually rather than fortnightly, would have covered periods of annual leave in any event, the Court concluded they would have been payable had the claimant taken his accrued annual leave and therefore should have been included in his annual leave payout on termination.

The Court reached a different conclusion regarding the availability allowance and overtime allowance. It found these allowances were linked to the claimant’s availability to perform work and, in the case of the overtime allowance, were paid at the respondent’s discretion. The Court held that there was no entitlement under the enterprise agreement to continue paying these allowances during annual leave. Although the respondent had historically chosen to continue paying them while the claimant was on leave, that practice did not create a legal obligation to include them in the payout of untaken annual leave on termination.

The Court also rejected the claimant’s argument that any of the allowances should have been included in his long service leave payment.

Regardless of whether the entitlement was assessed under the Agreement or under the LSL Act, the Court found that long service leave was payable at the claimant's base rate of pay. Both the agreement and the legislation expressly excluded allowances from the calculation of long service leave payments. As a result, none of the allowances were required to be included in the calculation of the claimant’s long service leave entitlement.

The Court found that the respondent had contravened s 44 of the Act by failing to comply with the National Employment Standards, specifically by failing to include the location and housing allowances in the claimant's annual leave payout as required by s 90(2) of the Act. It ordered the respondent to pay the claimant a further $11,981.60 in annual leave entitlements and $1,377.88 in superannuation relating to those amounts.

The remainder of the claim, including the claim for availability and overtime allowances and for additional long service leave payments, was dismissed.

The full decision can be read here.