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Accruing personal leave: the "working day" is now king

30 August 2019
Family sitting on pier by the sea
A recent court ruling relating to the accrual of personal/carer's leave will have a substantial impact on employers across Australia.

Background

Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) [2019] FCAFC 138 (21 August 2019) involves two full-time employees of confectionary giant Cadbury.

The employees, who ordinarily work based on a roster of three 12-hour shifts per week, argued that their personal/carer's leave should be accrued and paid at 120 hours per year, or ten 12 hour shifts (that is, the ordinary length of their "working day"). 

The employer (supported by the Federal Minister for Jobs and Industrial Relations, who took part in the case as an "intervener") argued that the employees accrued personal/carer's leave with reference to a "notional day", which for an employee who works 36 ordinary hours per week works out to 7.2 hours, or 72 hours personal leave per year.

 

What did the Court decide?

On 21 August 2019, a 2-1 majority of the Full Federal Court of Australia found in favour of the employees.

The decision means that employees covered by the National Employment Standards are entitled to 10 "working days" personal/carer's leave for each year of service.

A "working day" in this context is that part of a 24 hour period that an employee would ordinarily be working, which, importantly, may differ from employee to employee based on their patterns of work, such as dayworkers vs shift workers. 

 

 

What does this mean for employers?

The decision is controversial, because it flies in the face of long standing and commonly accepted industry practice. It may also be overturned by the High Court (if it grants leave to  hear the matter in the first instance) and/or be the subject of legislative change. 

However, it remains good law as at the time of this article, and contingency plans should be put in place in relation to reviewing payroll systems and reconciling leave accruals for the last 6 years. It will particularly impact employers that utilise non-standard work patterns such as shiftwork.

 

 

Impact on payroll systems?

It is standard and very common industry practice for employers (via their payroll systems) to accrue personal leave on an hourly basis, rather than on the basis of "working days".  

If this is the case for your payroll system, you will need to ensure that personal leave is calculated having regard to the actual portion of a 24-hour period that an employee would otherwise be scheduled to work on a "working day", even if that is longer than a "standard" or "notional" working day. 

 

If you require further information or have any queries in relation to this legal update, please contact Sina Zevari.


We would like to acknowledge the contributions of Brittany Turner.

Further Reading