Mardi Gras CEO fails to receive $21k long-service payout after departure

The Industrial Court of NSW has dismissed an application for money owed after determining an employee terminated their employment in rejecting a contract extension.

Despite claiming illness as the reason for termination, the worker was found not eligible for pro rata long service leave upon resignation under section 4(2)(a)(iii) of the Fair Work Act.

The applicant was employed by Mardi Gras Arts Limited between 19 November 2018 and 30 June 2025 as a business finance manager, chief financial officer, interim CEO, and then CEO, the last of which commenced on 2 October 2023 and ran until the conclusion of her employment.

Around the time of March 2025, the employee was allegedly considering resignation due to a bout of illness, with medical records indicating a rash and feelings of exhaustion.

During a period of personal leave, the applicant attended a virtual meeting with chairs of the respondent to be offered a 12-month extension to the CEO contract.

During cross-examination, co-chair Kathleen Pavlich recalled the applicant responding in words to the effect: “Being CEO is a lot of hard work and I don’t think I want to do it for another year. I have decided to leave.”

Following this meeting, the applicant informed the company secretary and members of the board that she would not be renewing the contract “which ceases on 30 June”.

The main point of contention between the two parties was the nature of separation, with the applicant claiming she terminated her employment due to illness and the respondent submitting the employment ended due to contract expiration, or if there was a termination, that it was not on account of illness.

The respondent relied heavily on the evidence of Pavlich in saying that there was no termination from either party given the clear offer and denial during the virtual meeting.

In this way, acting Justice Peter Kite noted this evidence unequivocally pointed to an employee-determined resignation.

He said: “The employer wanted the employment to continue and an offer of an additional term was made. [Applicant] decided not to continue to provide services to the respondent.

“In those circumstances it is clear, in my view, that her service was terminated by the decision of the applicant. The end date specified in the contract was only relevant in so far as it brought the parties to a position of considering continuation of the services.”

The next consideration for determination was whether the applicant’s termination was made on account of illness.

In this instance, Pavlich noted that no illness was mentioned during the virtual meeting, nor was she aware the employee was on personal leave at the time, further adding she believed the applicant had made up her mind not to continue her employment.

According to the applicant, ongoing sleep and stress issues caused the decision that she would not continue in her role as CEO, providing evidence via a patient health summary from a visit with Dr John Kevin. As the document noted, a swab test was conducted to determine a potential cause of the sickness.

The applicant also received a medical certificate for sick leave between 11 March and 14 March 2025.

While she acknowledged during cross-examination that she did not follow up with Kevin, the applicant also accepted she most likely received the message that the results came back as normal.

Further evidentiary support from the applicant was session notes with a consultant, Gena Hitzke, and another patient health summary report from Dr Samuel Saltoon, who also provided medical certificates within May 2025 that claimed the applicant had “a medical condition”.

However, Justice Kite noted that “there is no evidence of the qualifications of the consultant, Ms Hitzke”.

Further, he said: “The notes and medical certificates do little more than record what [applicant] reported to the doctors and consultant. None of them provided an expert report or were called to give evidence… there is no diagnosis of an ‘illness’ made by the doctors or the consultant.

“The question, therefore, is: do the symptoms or feelings identified by applicant amount to an illness within the meaning of the Long Service Leave Act?”

While it was accepted that the applicant claimed illness, the respondent maintained that the submitted medical certificates only evidenced sick leave was granted.

It further contended that it did not accept the applicant was ill.

Noting that the onus was on the applicant to prove termination on account of illness, the absence of expert evidence of a diagnosed health disorder did not persuade acting Justice Kite.

He said: “I find that the reason for termination of [applicant]’s services was not on account of illness.

“The applicant, therefore, does not meet the conditions of s 4(2)(a)(iii) of the Act entitling her to pro rata long service leave.”

The application for payment of money owed was dismissed, with acting Justice Kite noting that the parties will be given an opportunity to be heard on costs.

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