Employment Law – Changes to calculation of personal leave


Employment Law – Changes to calculation of personal leave

All business owners and advisers should be aware of a recent decision in regard to employment law, which will affect every business in Australia.

On 21 August 2019, in Mondelez v AMWU & Ors [2019] FCAFC 138, the Full Federal Court of Australia confirmed that all employees (including part-time employees) are entitled to 10 “working days” of personal/carer’s leave per year under the Fair Work Act, regardless of how many hours the employees work per day or how many days are worked per week.

Pending any appeal to the High Court (if leave is granted) the Full Federal Court’s decision reflects the current state of the law.  Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.  Personal leave is not accrued in hours but days!  A working day is the portion of a 24-hour period that an employee would otherwise be working.

So what was the case about?

Section 96 of the Fair Work Act entitles employees to 10 days personal/carer’s leave per year, which accrues by reference to ordinary hours of work.  Mondelez argued that its shift workers who worked 3 x 12-hour days per week, or 36 ordinary hours per week, should accrue 76 hours personal leave per year, being 10 days at 7.6 ordinary hours, which they argued reflected the industrially accepted standard numbers of hours for a day of leave.  The Full Court, by a majority, did not agree and held that all employees are entitled to 10 working days personal/carer’s leave per year, regardless of how many hours are worked in a particular day.

Under this approach, the shift workers were found to be entitled to 10 x 12 hours of personal/carer’s leave per year, or 120 hours in total.  The decision also confirms that part-time employees (regardless of the number of days worked each week) are also entitled to 10 full working days of personal/carer’s leave per year.

The Court also found that a working day is not a calendar day.  Rather it is the working hours that the employee is scheduled to work in the 24-hour period commencing from the time an employee starts work on a particular day.

It would seem, therefore, that the “standard” 7.6 hour day is no longer standard!

The decision will have wide-ranging implications for employers, the overwhelming majority of whom do not presently accrue or account for personal/carer’s leave in this manner.  In particular, most payroll systems accrue personal/carer’s leave on an hourly basis and/or pro rata based on days worked.  In other words, payroll systems tend to accrue 76 hours of personal/carer’s leave per year for full-time employees, and a pro-rata amount for part-time employees.  If you or your client has such a payroll system, and your employees work anything other than a 7.6 hour day, 5 days a week, you may need to review how you are accruing and paying for personal/carer’s leave.  Failure to accrue and pay in accordance with the current law will have financial and legal implications.

Check your payroll systems and speak with your employment law advisors for more information.  You can also check with Fair Work Australia for more information on your obligations.

Should you wish to talk to us about this, please call Suelen McCallum on 02 9633 3333 or email mail@dvtgroup.com.au