People Matters, November 2020

On August 13, 2020, the High Court of Australia handed down its long-awaited decision in relation to the quantum of accrued personal/carers leave. The High Court HAS set aside the full Federal Court judgment handed down last year and, in its place, declared that:

“The expression ’10 days’ in s96(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.”

Put another way the decision means an employee is entitled to leave that is calculated on the ordinary number of hours they work in a fortnight.

Background 

Two shift workers employed by Mondelez (Cadbury) in Tasmania sought advice from their Union in relation to the amount they should be paid when they took personal/Carers leave.

As they worked twelve hour shifts the employees believed they were entitled to be paid for the full 12 hours shifts if they were off work, their union agreed.

The Fair Work Act 2009, National Employment Standards (NES) states a full-time employee is entitled 10 Personal/Carers days leave per year. Part time employees receive a pro rata amount calculated on the hours they work in a fortnight.

Using the minimum 10 days outlined in the NES the Union concluded that if a fulltime employee who worked 7.6 hours per day was entitled to 76 hrs Personal/Carers leave per year then an employee who worked 12 hours shifts would be entitled to 120 hrs per year over ten days.

Mondelez, the employer disagreed, and the matter was eventually determined by a full Federal Court which handed down a decision that favoured the Union which is:  that an employee was entitled to 10 days per year at the shift length they regularly worked. If the shift length varied, the employee will to be paid an amount equivalent to the hours they would have worked.

The Full Court of the Federal Court also determined that permanent part-time employees were also entitled to 10 days Personal/Carers leave per year.

Putting this into perspective, an employee who worked two days per week had just been disproportionally awarded the same number of paid Personal/Carers leave as a fulltime staff member. The interpretation of the Fair Work Act was altered to reflect the decision.

Soon after the decision the Mondelez, with the support of the Federal Government, applied to the High Court of Australia for leave to appeal the decision. In December 2019, the High Court provided the necessary permission to appeal the decision of the Federal Court.

  

There are two very important facts to mention regarding the High Court of Australia which meant “the winner takes all”:

  1. A matter heard on appeal in the High Court of Australia may “set aside” a previous decision and the High Court may issue new orders, and
  2. Orders made by the High Court of Australia cannot be appealed, there is no Higher Court in Australia.

The High Court decision reaffirms the interpretation that was in place prior to the Federal Court decision of 21 August 2019.

The following examples provide a clearer explanation of how the leave is accrued and paid.

Examples

For Full-time employees

The employees work 38 hours over 4 days (i.e. 9.5 hours per day) In a fortnight this equates to 76 hours.

This means they are entitled to 76 hours of Personal/Carers Leave per year. If they are absent sick on one of their ordinary working days, then they will be paid 9.5 hours from their accrued personal/carer’s leave. They are not entitled to 10 days of 9.5 hours (95 hours) in a 12-month period.

For Part-Time employees  

Part-time employees receive a proportional amount. For example, if a part-time employee works 30 hrs per week, this equals 60 hrs in a fortnight. They are then entitled to 60 hrs Personal Carers leave per year while they remain at their current part time hours.

 

If you have any concerns or questions in relation  to the High Court of Australia decision of how to calculate the proportional amount of leave a part time employee accrues please contact Steve Caslick on (02) 9068 2212 or via email  [email protected]