Personal Leave under the Fair Work Act – the High Court has spoken

The High Court has recently interpreted s96(1) of the Fair Work Act and clarified that:

  • An employee’s entitlement to 10 days of personal/carer’s leave is based on:
    • an employee’s ordinary hours of work in a week over a fortnightly period; or (where there are inconsistent fortnightly hours)
    • 1/26 of the employee’s ordinary working hours in a year; and
  • A ‘day’ for the purposes of s96(1) Fair Work Act refers to a ‘notional day’, consisting of 1/10 of the equivalent of an employee’s ordinary hours of work in a fortnightly period.

The decision will have come as a significant relief to many employers, and a corresponding disappointment to many employees.

Facts

Mondelez operates the Cadbury factory in Claremont, Tasmania and is a party to the Claremont Operations (Confectioners & Stores) Enterprise Agreement 2017 (EA).  The EA relevantly provides for 36 hours ordinary hours of work per week over shifts of 8 or 12 hours.

Following a successful first instance hearing, in 2019 two Cadbury factory workers successfully argued (by a 2-1 majority) in the Full Federal Court that their 12-hour shifts entitled them to 10 days of personal/carer’s leave, paid at 12-hours per day.

Mondelez appealed the decision to the High Court, arguing their 12-hour shift-work employees should only be entitled to 6 “notional days” of personal/carer’s leave per year as they only work 6 days per fortnight, albeit for 36 hours over those days.

Reasons

By a 4:1 majority, the High Court agreed with Modelez and found the 12-hour shift-workers were entitled to 10 days of personal leave, calculated at 1/26 of their ordinary fortnightly hours – not 10 days of personal / carer’s leave calculated at 12 hours per day.  After reviewing the legislation, the Court decided that a ‘day’ in section 96 was a “notional day”, being 1/26 of an employee’s ordinary hours of work in a year.

Thus the High Court interpreted 96(1) to provide that personal/carer’s leave:

  • is accrued and taken based on an employee’s ‘ordinary hours of work’ per fortnight; and
  • is not accrued based on the number of days worked per fortnight nor the pattern of days or hours an employee works (say, where their ordinary hours are compressed, as was the case with the Mondelez employees).

What is the result

The decision confirms that employees accrue their equivalent of two weeks paid personal/carer’s leave over the course of a year of service and paid on the basis of ordinary hours on those days.

This decision means the accrual of an employee’s personal/carer’s leave is calculated based on a fraction of the number of hours worked per fortnight, not by how many days are worked.

Should the Fair Work Act be amended?

Ultimately, it is only the majority in the High Court that matters and so the position is now settled.  However, the decision of the High Court was not unanimous, with one judge agreeing that the original trial decision (and the Full Federal Court decision) was correct.

Over the course of the litigation the workers convinced 4 other judges that a day of personal/carer’s leave equated to an entitlement to 10 “normal” days’ work per year. This suggests that an amendment to legislation would be (and would have been) of practical benefit to both employers and employees alike. Nevertheless, until any amendment is made, employers should ensure that their systems allow for personal/carer’s leave to accrue and be deducted based on 10 “notional days” per annum.

If you have any queries or would like further information regarding this article, please contact:

Brett Cassidy
Principal
M: 0438 368 053
E: bcassidy@pageseager.com.au

Joe Mullavey
Senior Associate
M: 0416 794 061
E: jmullavey@pageseager.com.au

Anna Di Carlo
Lawyer
T: (03) 6235 5141
E: adicarlo@pageseager.com.au

Published: 16 September 2020

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