In August the Full Bench of the Federal Court handed down a decision regarding the meaning of a ‘day’ for the purpose of personal/carer’s leave under the Fair Work Act 2009 (Cth).
As the Court points out at the beginning of the majority judgment, an employee is entitled to 10 days of paid personal/carer’s leave, but “for a provision expressed so simply, its interpretation is surprisingly complex.”
In summary, the majority of the Court found that the purpose of personal/carer’s leave is to provide income protection. If an employee is absent from work and satisfies the requirements for taking paid personal/carer’s leave, they do not suffer a loss of income on that day. As a result, employees who take paid personal/carer’s leave are entitled to a full day off (if they have sufficient leave accrued) and the payment for that day depends on the ordinary number of hours the employee would have been working, had they not been absent.
The issue arose specifically in relation to Mondelez employees who worked 36 hours per week, averaged over a 4-week cycle and in 12 hour shifts (presumably an average of 3 shifts per week). Mondelez provided the employees with 96 hours of personal/carer’s leave per year of service but this only entitled them to take eight 12-hour shifts off work as personal/carer’s leave. The majority of the Court found that the employees were entitled to ten periods of 12‑hour shifts off each year as personal/carer’s leave, which equates to 120 hours per annum. Conversely, if they were rostered to work five 7.2 hour shifts per week, they would effectively be entitled to 72 hours of paid personal/carer’s leave per annum.
The decision has caused unrest with employers, many of whom have payroll systems that accrue personal/carer’s leave based on the number of ordinary hours an employee works, and on a pro-rata basis for part-time employees. Employers are particularly concerned about the entitlements of employees, including those in flexible service industries, who work varying rosters with different shift lengths. In addition, many part-time employees may now be entitled to more leave than their current accrued balance, following this decision.
The Minster for Jobs and Industrial Relations intervened in the case to argue that the expression “10 days” should be understood as a reference to a particular number of hours of personal/carer’s leave. The dissenting judge, O’Callaghan J, agreed and found that personal/carer’s leave should accrue based on ordinary hours to ensure that employees working the same overall hours accrued the same amount of leave.
In light of the dissenting judgment and the Minister’s intervention in the case, there is a real possibility that Mondelez will appeal the decision. If there is no appeal, the government may seek to change the legislation to clarify the position.