Employers have gained more consistency around employee leave entitlements after the High Court overturned a contentious decision on accrual and payment of sick leave.
The High Court last week upheld an appeal by Cadbury owners Mondelez International and the Morrison Government over personal/carer’s leave for employees, challenging last year’s Full Federal Court of Australia decision.
CCIWA Members can access a breakdown of the decision here.
In August last year, two Cadbury employees successfully argued in the Full Federal Court that because they worked 12-hour shifts, their 10 days of personal leave should be paid at 12 hours a day.
It meant the employees would be entitled to 120, rather than 72, hours of paid leave.
The Full Federal Court found the National Employment Standards entitled all employees 10 days of personal/carer’s leave, regardless of how many hours they worked each day.
The case drew upon the Fair Work Act 2009 provision that for each year of service “an employee is entitled to 10 days of paid personal/carer’s leave”.
The High Court said the issue was whether the reference to ‘10 days’ meant a ‘notional day’ or a ‘working day’, adopted by the Full Federal Court, and found the answer was the former.
“A majority of the High Court rejected the ‘working day’ construction and instead held that what is meant by a ‘day’ or ‘10 days’ must be calculated by reference to an employee’s ordinary hours of work,” the ruling stated.
The High Court continued that, for the purposes of the Fair Work Act 2009, ‘10-days’ is two standard five-day working weeks, where ‘a day’ consisted of one-tenth of the equivalent of an employee’s ordinary hours of work within a two-week period.
“Because patterns of work do not always follow two-week cycles, the entitlement to ‘10 days’ of paid personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year,” it said.
The High Court rejected the Australian Manufacturing and Workers Union’s claim that every employee, regardless of their working patterns, saying that would “give rise to absurd and inequitable outcomes”.
It found that a ‘day’ must be calculated in accordance with an employee’s ordinary hours of work – for example, if an employee usually works 76 ordinary hours a week, they are entitled to 10 days sick leave at 7.6 hours.
The High Court ruled that since the Cadbury employees worked only three long shifts a week, they were only entitled to six days at 12 hours of paid personal/carer’s leave, equivalent to ten days at 7.2 hours.
The outcome is welcomed by the Australian business community, with claims it leads to greater clarity over employees leave entitlements.