On the 13th of August 2020, the High Court handed down its decision on how paid personal/carer’s leave is to be accrued and taken. In Mondelez Australia Pty Ltd v AMWU & Ors [2020] HCA 29, the High Court has clarified that personal/carer’s leave is to accrue at the rate of 10 notional days per year of service, based on ordinary hours of work.

This highly anticipated decision follows the Full Federal Court’s determination in August 2019 that employees’ personal/carer’s leave entitlement of 10 days per year of service is to be calculated using the ‘working day’ construction. This meant that employees working longer than standard hours were entitled to calculate their accrued personal/carer’s leave based on days worked (including hours worked above ordinary hours).

Given the potential practical and financial impacts, employers can now breathe a sigh of relief. The High Court has rejected the Full Federal’s Court’s approach:
“The ‘working day’ construction adopted by the majority in the Full Court is not consistent with the purpose of s96 or the stated objectives of the Fair Work Act of fairness, flexibility, certainty and stability” said Chief Justice Kiefel and justices Nettle and Gordon.

What does this mean for employers?

This means the position is back to the way it was before the Full Federal Court handed down its decision. It is a return to the longstanding and widely accepted interpretation that an employee accrues personal/carers leave for each ordinary hour worked, which is in turn then deducted from their accrual balance for each ordinary hour the employee is considered to be on personal/carers leave.

The High Court clarified the position as follows: “The expression ’10 days’ in s96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer’s leave accruing for every year of service equivalent to an employee’s ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee’s ordinary hours of work in a year. A ‘day’ for the purposes of s 96(1) refers to a ‘notional day’, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period.”

Key take-aways

• Personal/Carers leave accrues on ordinary hours only.
• Full time employees working 38 hours per week will accrue 76 hours of personal/carer’s leave per year of service, based on 7.6 ordinary hours per day.
• Part-time employees are entitled to 10 days of personal/carers leave, however these are notional days and based on their ordinary hours of work averaged over a fortnight. This means they receive a pro-rated entitlement.
• Shiftworkers working varied rosters are entitled to 10 days of personal/carers leave, calculated on their ordinary hours of work averaged over a fortnight. A full time shiftworker working an average of 38 ordinary hours per week will accrue 76 hours of personal leave per year of service.

Want to know more?

If you need any help to ensure your business is compliant, or want to understand how these changes affect your business, please contact Sean Melbourne on 0411 647 453 ( email ).