Common Sense Prevails in High Court Decision
13 August 2020
IN BRIEF: Today the High Court overturned the 2019 Mondelez decision which impacted the accrual and application of personal/carer’s leave for employees working non-standard or variable hours.
The High Court of Australia has granted the appeals by Mondelez International and the Australian Government against the decision of the Federal Court in the Mondelez v AMWU case. In doing so, the High Court has preserved widespread industry practice and clarified the quantum of personal/carer’s leave entitlements for full-time and part-time employees.
This overturns the decision of the Full Federal Court handed down last August, that two 12-hour shift workers at a Cadbury chocolate factory were entitled to 120 hours of paid personal/carer’s leave, rather than leave payments for ten shifts of 7.6 hours.
The interpretation adopted by the High Court means that a full-time employee who works 38 ordinary hours per week, is entitled to 76 hours of personal/carer’s leave per year and a part-time employee who works 20 hours per week, is entitled to 40 hours of personal/carer’s leave per year.
The majority of the High Court found that leave accrues according to an employee’s ordinary hours of work. Under the National Employment Standards (NES), employees are entitled to ten days personal/carer’s leave per annum, equivalent to ten days of 7.6 hours each, or 76 hours.
The majority found that, “section 96 confers a progressively accruing entitlement to paid personal/carer’s leave equivalent to an employee’s ordinary hours of work in a two-week period, for each year of service. “10 days” is two standard five-day working weeks. One “day” refers to a notional day consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week period.”
The majority rejected the 10 “working day” interpretation of the Federal Court as this, “construction would lead to inequalities between employees with different work patterns, and so would be unfair. An employee whose hours are spread over fewer days with longer shifts would be entitled to more paid personal/carer’s leave than an employee working the same number of hours per week spread over more days.”
In rejecting the “working day” construction, the Court has rejected the notion that part-time employees would be entitled to the same amount of personal/carers leave as full-time employees. In particular, the Court rejected the submission of the Union parties that the Fair Work Act provides that each employee could have ten working day absences from work per year from each employer, regardless of the hours worked.
What The Decision Means?
The Court’s decision means that full-time and part-time employees can be absent from work due to illness or carer’s responsibilities without loss of pay for ten days (or 76 hours) per year, or a pro-rata of that amount for part-time employees.
The High Court decision will be welcomed by employers as a common-sense outcome regarding what is a “day” for the purpose of personal/carer’s leave and removes the risk of significant cost implications for many businesses. The Court’s judgment avoids differential and unfair outcomes between employees based on their shift length and whether they are full-time or part-time, and by doing so recognises the diversity of working arrangements which support productive workplaces.
CCER will keep you up to date with any further developments and recommends that you seek specialist advice from your payroll provider to ensure your systems are correctly calculating and processing personal/carer’s leave.
Disclaimer: CCER does not give legal advice and this information should not be taken as such.