Are you getting personal leave entitlements right?

Do you accrue personal leave for your permanent employees on the basis that the entitlement is capped at 2 weeks per year of service (or 76 hours), with part-time employees accruing a pro rata entitlement based on their ordinary hours of work?

 If so, you’re certainly not alone. For many businesses this has been the industry practice for over a decade.

 Unfortunately, the Federal Court has recently signalled that this industry practice is wrong… at least for now.

 In the recent decision of Mondelez v AMWU [2019] FCAFC 138, the Full Federal Court handed down a decision that concerned the method of accruing personal leave under the Fair Work Act 2009.

The effect of the Court’s finding is that all permanent employees (including both full-time and part-time employees) can access up to ten working days of personal/carer’s leave for each year of service, regardless of the number of ordinary hours the employee ordinarily works on those days or their pattern of work.

 For example, applying the decision, employees working three shifts of 12 hours per week should accrue personal leave entitlements to 10 working days per year and be paid the equivalent of an ordinary shift on days they are absent from work due to illness or caring responsibilities.

 For a provision that is expressed so simply (see section 96 here), the interpretation adopted by the Court was surprisingly complex. Assuming you don’t want to read the 219 page judgement, the key takeaways are as follows:

 Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.

• The leave protects those employees’ income when they are entitled to be absent from work due to illness or injury (or providing care or support to a family or household member who is ill, injured or suffering from an unexpected emergency).
• The leave must be calculated in working days, not hours. A working day is the portion of a 24 hour period that an employee would otherwise be working.
• An employee’s entitlement is expressly based upon time working for the employer and is expressly calculated in days.
• For every day of personal/carer’s leave taken, an employer deducts a day from the employee’s accrued leave balance. If an employee takes a part-day of leave, then an equivalent part-day is deducted from the employee’s accrued leave balance.

 The Fair Work Ombudsman has also updated its advice to reflect the outcome of the decision, in addition to amending the Fair Work Information Statement.

Fortunately for employers, the Commonwealth Government has intervened and announced it will support an application for special leave to appeal the decision to the High Court of Australia, which may have the effect of overturning the decision. As the current state of the law represents a significant departure from how many businesses have historically accrued personal leave, employers should certainly continue to watch this space.

In the mean-time, HRIA members are encouraged to contact HRNet (operated by MST Lawyers) to obtain professional advice about the impact of the decision on their individual circumstances.

For employment advice through your HRIA member benefits, log into to your member portal online at HRNet.