Paid personal leave to be accrued in days not hours after important new court ruling
In a decision by the Federal Court of Australia an important ruling has been made on precisely how the statutory entitlement to personal / carers leave of 10 days found in s96 of the Fair Work Act should be calculated in light of a lack of clarity around the definition of “days” to be accrued.
As a result of the decision, employers will be expected to adjust how they accrue employees personal/carers leave away from an accrual that is based on hourly increments that is taken by employees according to a standard day of work towards a system where the entitlement is accrued on a per ‘day’ basis..
Going forward, regardless of how many hours an employee works in a day, whether it be six or 12, all employees, including part-time employees, are entitled to 10 working days of personal / carer’s leave per year.
The issue arose due to a dispute between Mondelez, a global confectionery business and the Australian Manufacturing Workers Union over what entitlement to personal / carers leave workers on 12 hours shifts and workers on shifts other than 12 hours should have.
Mondelez, believed the entitlement should be calibrated to hours worked meaning the more hours worked the more leave accrued, the AMWU claimed that it should not, arguing that in their interrelation the National Employment Standards (NES) in the Fair Work Act entitled employees to 10 calendar days of personal/carer’s leave without loss of pay and that Mondelez’s interpretation focused on the monetary quantum of the leave, whereas the true purpose of the entitlement is to protect an employee from loss of income as the result of personal or familial illness.
The court found against Mondelez.
The consequence of this decision is that employers must now ensure that their payroll systems reflect accrued days leave in days and not hours.