The High Court hands down decision on Personal Leave Entitlements

On 13 August 2020, the High Court handed down the long awaited decision in the matter of Mondelez Australia Pty Ltd v AMWU & Ors [2020] HCA 29.  This is an important decision which has now confirmed how paid personal/carer’s leave should be accrued and taken under the National Employment Standards.

The High Court of Australia has now clarified that:

  • the entitlement to 10 days of personal/carer’s leave under the National Employment Standards (NES) is calculated based on an employee’s ordinary hours of work, not working days; and
  • 10 days of personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year.

The High Court has confirmed that a ‘day’ should be understood by reference to an employee’s ‘ordinary hours of work’ and that the expression ‘10 days’ in the Act refers to 10 ‘notional days’ rather than 10 ‘working days’. This means that personal leave is accrued on the basis of an employee’s ordinary hours of work in a year and a “day” of personal leave is an average day for the worker, not the specific day of absence.

In handing down its decision the High Court declared that:

“The expression ’10 days’ in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer’s leave accruing for every year of service equivalent to an employee’s ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee’s ordinary hours of work in a year. A ‘day’ for the purposes of s 96(1) refers to a ‘notional day’, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period.”

What this means for employers is that paid personal/carer’s leave should be accrued and taken on a progressive (or pro rata) basis, according to ordinary hours worked for all employees. For example, a full time employee who works 38 hours per week will be entitled to accrue and take 76 hours (or 10 days if they work 7.6 hours per day) of paid personal leave per year. For a part employee who works 22.8 hours per week (3 days of 7.6 hours), they will accrue 45.6 hours (or 6 days) of personal leave per year.  For shift workers, their personal leave will accrue and be taken in hours, not days.

The High Court’s decision overturns a decision made by the Full Federal Court in August 2019 which determined that personal/carer’s leave was calculated in ‘working days’, not hours, which had consequences for employees on different work patterns, including shift workers and part time employees.

The bottom line is that personal leave should accrue as it used to, based on ordinary hours worked.

If you need further information or advice for your business please contact Katherine Hietbrink, Employment Lawyer and HR Advisor, on  (03) 5434 6666 for a no-obligation discussion.

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