This decision is of particular significance to part-time employees and workplaces where employees work varying hours from day to day as part of a roster.
The decision is controversial because it means that leave records cannot accurately reflect the value of the accrued leave. Some employees may also have underpayment claims in respect of personal/carer’s leave they have taken.
The Act provides that employees are entitled to 10 days of paid personal/carer’s leave per year. However, as the Court points out at the beginning of the majority judgment, “for a provision expressed so simply, its interpretation is surprisingly complex.”
The issue arose 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 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.
However, 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.
This meant that the employees were entitled to ten days off, and not to a pre-determined number of hours. For employees working 36 hours across three 12 hour shifts per week, that would equate to 120 hours of personal/carer’s leave per annum. For employees working 36 hours across five 7.2 hour shifts per week, they would 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 in a week, 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.
On 17 September, Mondelez and the Federal Government applied to the High Court for special leave to appeal the decision. Accordingly, there may yet be further developments on this case.