The High Court has ended debate by overturning the Full Federal Court ruling in Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union  FCAFC 138 (“Mondelez Decision”) regarding personal/carer’s leave. This is vitally important for part-time employees and employees who work shifts of different lengths.
The Federal Court’s original decision had unsettled many employers in respect to: part-time employees accruing the full ten days of personal carer’s leave in each single year of employment (ie not reduced pro rata for FTE); and the payroll system changes required and the potential liability for historical under payments or under-accruals. Employers will be relieved that in a majority ruling, the High Court has upheld the previously-understood principles about the accrual, payment and deduction of personal/carer’s leave.
In summary, the outcome confirms that under the National Employment Standards (“NES”): Personal/carer’s leave accrues and is taken according to the employee’s ordinary hours of work
The amount of personal/carer’s leave to be accrued is the number of ordinary hours the employee would be expected to work in a two-week period. It can be calculated as 1/26 of an employee’s ordinary hours of work in a year.
It follows that part time employees accrue personal/carer’s leave in hours according to their ordinary hours worked (i.e. pro rata to FTE hours).
When an employee takes personal/carer’s leave:
– they must be paid at the base rate of pay for all ordinary hours they would have otherwise
worked in the period of leave; and
– the number of hours taken as personal/carer’s leave is deducted from the employee’s
accrued personal/carer’s leave entitlement. This means that all employees who work the same
number of ordinary hours will accrue the same amount of leave, regardless of their shift lengths
Variable shift lengths:
Mary’s full-time ordinary hours are 76 hours per fortnight, worked as eight shifts of 9.5 hours each. Her NES entitlement for personal/carer’s leave is 76 hours (equating to eight full working days), which accrues progressively throughout the year. If Mary takes a full day of leave 9.5 hours will be paid and deducted from her accrued balance.
Bill’s full-time ordinary hours are also 76 hours per fortnight but worked as ten shifts of 7.6 hours each. His NES entitlement for personal/carer’s leave is also 76 hours (but equates to ten full working days). If he takes a full day of leave 7.6 hours will be paid and deducted from his accrued balance.
Sunil’s part-time ordinary hours are 26 hours per fortnight worked as two shifts of 7.6 hours and two shifts of 5.4 hours. His NES entitlement for personal/carer’s leave is the 26 hours that he would work in a fortnight. If he takes a full day of leave, he will be paid for the ordinary hours that he would have worked on the day of leave, and that same number of hours will be deducted from his accrued balance. Because his shifts are of different lengths, the number of working days in his total 26-hour entitlement cannot be known in advance.
What if there is an enterprise agreement?
Under an enterprise agreement, the entitlement to personal/carer’s leave (and other leave types) must not be inferior to the NES. However, the agreement may provide more beneficial entitlements. You should seek advice before applying this appeal decision to your agreement. If you are negotiating an enterprise agreement, we recommend that to avoid ambiguity or error you take expert advice about this case before finalising the draft.
What should employers do next?
The decision is complex – this Note discusses only the key outcomes.
If you are uncertain about how you should be accruing, deducting and paying leave, we recommend that you seek advice about your specific circumstances. Employers should not rely on previous EMA Notes setting out the interpretation of the legislation under the law as it was before this appeal.
Webinar on aspects of paid leave
EMA Consulting will run a webinar on how annual leave and personal / carer’s leave is accrued, paid and deducted under the NES, on Wednesday 26 August at 10:00 am. If you would like to attend, details of content and how to book can be found here
Require further information/assistance? If you require further information or advice, please contact one of our consultants.
1 Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union  HCA 29 (13 August 2020)