On 13 August 2020 the High Court in a majority decision overturned last year’s Federal Court Ruling on the interpretation of personal/carer’s leave entitlement under s96(1) of the Fair Work Act 2009 (Cth) (“Fair Work Act”).
In August last year in the matter of Mondelez v AMWU [2019] FCAFC 138 (“Mondelez Decision”), the Full Court of the Federal Court (“Full Federal Court”) ruled that all employees (excluding casuals) are entitled to 10 days of paid personal/carer’s leave per year under the Fair Work Act, irrespective of the number of hours that they work per day or the number of days they work per week. The Court ruled that a “day” was a reference to the portion of a 24 hour period that would otherwise be allotted to work (“Working Day Construction”). So, a full-time or part-time employee was entitled to 10 days per year x (times by) the portion of a 24 hour period that would otherwise be allotted to work.
This approach from the Full Court created several anomalies and inconsistencies with respect to the taking and accruing of personal/carer’s leave. For example, a part-time employee that worked 2 x 8 hour shifts per week, would be entitled to take up to 10 days of personal/carer’s leave per year and would be entitled to be paid 8 hours for each of the day’s in which they were unable to attend work due to personal/carer’s leave. Such an example results in the employee being entitled to the equivalent of 80 hours of personal/carer’s leave in a year, which is more than a full-time employee working 38 hours per week would receive.
The employer, Mondelez Australia Pty Ltd and the Federal Minister for Jobs and Industrial Relations appealed the Mondelez Decision to the High Court on the ground that the majority in the Full Federal Court decision erred in their construction of the meaning of a “day” under s96(1) of the Fair Work Act.
The High Court rejected the Union’s “Working Day Construction” argument and allowed the appeals of the employer and Minister. The High Court took the approach that the 10 days in s 96(1) of the Fair Work Act must be calculated by reference to an employee’s ordinary hours of work over a two-week (fortnightly) period. A ‘day’ is one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period (“Notional Day Construction”).
The High Court concluding that Order 1 made by the Full Federal Court should be set aside and declared that:
“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 s96(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.”
To put the High Court’s decision into context, a full-time employee working 38 ordinary hours per week would accrue over a year of service 76 hours of paid personal/carer’s leave. A “day” would be 7.6 hours. A part-time employee for example working 20 ordinary hours per week would accrue over a year of service 40 hours of paid personal/carer’s leave. A “day” for the part-time employee would be 4 hours.
The High Court’s approach is consistent with long standing industrial practice on how personal/carer’s leave should be accrued and paid.
Members can contact Owen, Gary or Didier in relation to the High Court decision.
A summary of the High Court Decision can be downloaded here:
https://cdn.hcourt.gov.au/assets/publications/judgment-summaries/2020/hca-29-2020-08-13.pdf