The High Court recently clarified in Mondelez Australia Pty Ltd v AMWU [2020] HCA 29, the meaning of “10 days” of paid personal/carer’s leave provided for in the Fair Work Act 2009.
Under section 96(1) of the Act, “for each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave”.
The AMWU argued on behalf of two employees of Mondelez that employees who are rostered to work three 12-hour shifts a week were entitled to 120 hours of paid personal/carer’s leave (being 10 days of 12 ordinary hours per day). They also argued that employees who worked five 8-hour shifts a week were entitled to 72 hours of paid personal/carer’s leave (being 10 days of 7.2 ordinary hours per day).
In the 4 to 1 majority decision, the High Court found that a “day” in relation to accruing paid personal/carer’s leave was a “notional day”, which consisted of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week period.
The Court therefore held that, “10 days” in section 96(1) of the Act means an amount equivalent to 1/26th of an employee’s ordinary hours work in a year regardless of an employee’s roster, shift or part-time arrangement.
The Court rejected the AMWU’s argument that a “day” was a “working day”. On that interpretation, “10 days” in section 96(1) of the Act would be interpreted as being ten separate 24 hour periods.
In coming to this decision, the Court has reversed the Full Court of the Federal Court’s earlier decision to the contrary.
Taking into account the Act’s object of “fairness”, the Court rejected the Federal Court’s interpretation on the basis that it produced outcomes that would “give rise to absurd results and inequitable outcomes”.1
The High Court’s interpretation confirms the previous widespread method of accruing and deducting 10 days of paid personal/carer’s leave according to the employee’s ordinary hours of work.
The effect is that paid personal/carer’s leave accrues progressively according to ordinary hours worked at a rate of 1/26 for all full-time and part-time employees. That leave is deducted progressively based on ordinary hours taken as personal/carer’s leave.
The decision reflects the Act’s object of “fairness” because all employees working the same number of ordinary hours accrue paid personal/carer’s leave at the same rate and, after working the same number of ordinary hours, are entitled to be paid for the same number of ordinary hours regardless of whether their ordinary hours over a two-week period are worked across any number of days.
This High Court decision does not prevent those employers who already provide, or want to provide, more paid personal/carer’s leave in an enterprise agreement or other industrial instrument than the 10 days provided for as a minimum in the Act.
Employers should review the payroll rules to ensure paid personal/carer’s leave is being correctly accrued, paid and deducted. This is especially important if employers changed their methods of calculating accruals, payments and deductions following the Full Court of the Federal Court’s decision.
If you have any questions about paid personal/carer’s leave and how your business calculates accruals, payments and deductions, please contact Lavan’s Employment and Education team.
[1] Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing And Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) & Ors [2020] HCA 29, [3].
