PAID PERSONAL LEAVE CLARIFIED BY HIGH COURT DECISION
Joe Murphy, Managing Director – Australian Workplace, and Luis Izzo, Managing Director – Sydney Workplace at Australian Business Lawyers & Advisors explain the impacts of the recent High Court decision.
The High Court recently handed down a decision clarifying how paid personal/carer’s leave is accrued and taken. This is the first decision on the Fair Work Act’s National Employment Standards since their introduction more than 10 years ago.
The High Court overruled the contentious ruling of the Full Federal Court in Mondelez Australia Pty Ltd v AMWU & Ors  HCA 29, finding employees are entitled to 10 ‘notional days’ of personal leave a year by reference to their ordinary working hours.
This contrasts with the Federal Court’s view that 10 days of personal leave entitles all employees (regardless of their actual working hours) to 10 x 24-hour periods off work each year.
WHAT DOES IT MEAN?
Under the High Court’s approach, employees are entitled to 10 ‘notional days’ leave per year. However, the duration of a ‘day’ is determined by identifying 1/10th of an employee’s ordinary hours over a two-week period (which equates to 1/26th of their total ordinary hours over the course of a year).
Full-time employees: For a full-time employee working 38 hours a week and 76 hours a fortnight, they would accrue based on an entitlement to a 7.6-hour ‘notional day’.
Over the course of a year, an employee would accrue 76 hours of leave or 10 x 7.6-hour notional days.
Part-time employees: For a part-time employee working 20 hours a week and 40 hours a fortnight, they would accrue based on an entitlement to a 4-hour ‘notional day’, as opposed to 7.6 hours.
Over the course of a year, the part-time employee would accrue 40 hours of leave or 10 x 4-hour notional days.
Shift workers: For shift workers working varied patterns of work across fortnights or months, the Court has said employers can determine the value of ‘a day’ by identifying 1/26th of the employee’s ordinary hours over the course of a whole year.
This enables employers to ignore weekly or monthly variations in rosters and assess the total hours of work as a whole.
For most full-time shift workers (who ultimately work an average of 38 hours per week over the course of a year), this means that they will be entitled to 10 x 7.6 hour days each year.
CLARITY FOR EMPLOYERS
The ruling should come as a relief to employers across the country, given that almost all payroll systems utilised in Australia can accrue and deduct leave according to the approach identified in the High Court judgment.
The judgment also clarifies part-time employees cannot access the same (or even more) hours of personal leave each year when they do not work the same load as full-time employees.
Under the judgment, part-time employees are still entitled to 10 days’ leave, however, these are ‘notional days’ and the number of hours in each day of leave is to be calculated on a pro-rata basis depending on how many hours the part-timer works in a fortnight.
Practically speaking, this is a return to the accrual of leave on an hourly basis and the taking of leave, by drawing down from the employee’s pool of accrued paid personal leave on an hourly basis.
This article originally appeared on Business Lawyers & Advisors.