The issue that has bedevilled some employers is how to measure '10 days' when providing for the National Employment Standard (NES) entitlement to statutory paid personal/carer's leave.

The Full Federal Court has recently issued a ruling ( Mondelez v AMWU [2019] FCAFC 138) that appears to resolve the question – subject to any appeal to the High Court or intervention by Parliament, and the result is one that is not favoured by many employers.

The Court was concerned with s 96(1) of the Fair Work Act, which provides for paid personal/carer's leave:

"For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer's leave."

In reaching their joint judgment, the Honourable Justices Bromberg and Rangiah succinctly summed up the premise of the case:

"For a provision expressed so simply, its interpretation is surprisingly complex."

The facts of the case are straightforward. The Applicant, Mondelez, sought a declaration from the Court on the meaning of 10 days of paid personal/carer's leave. Mondelez had two employees who worked 12 hour shifts three times per week for a total of 36 hours per week. When a shift worker would take a day of personal/carer's leave Mondelez would pay the worker for 7.2 hours of work (36 hours divided by five days). Mondelez's interpretation of a 'day' was the industrial one otherwise referred to as a 'notional' day. The AMWU argued that Mondelez had incorrectly interpreted what constitutes a 'day' and subsequently had been underpaying their shift workers for personal/carer's leave.

The Court found that a day is categorised as a 'working day', meaning the hours allotted to work in a 24 hour period. Practically, this means that a 'day' under s 96(1) is a worker's ordinary shift on the day of the personal leave, regardless of the length of the shift. If a worker has a 12 hour shift or four hour shift, they will be compensated for the entirety of the shift and one day will be deducted from the allotted 10 days of leave. Mondelez argued that this interpretation of a 'day' would result in an inequity because it would result in a person who missed 10 of their 12 hour shifts to be entitled to 120 hours of personal leave, while a person who missed 10 of their four hour shifts, would only be entitled to 40 hours of personal leave. The Court dismissed this assertion by stating:

"If employees are able to take an equal number of 'working days' of paid personal/carer's leave and neither loses income, how can there be inequity or unfairness to one of them?"

In summary, the outcome can be seen from a practical view as follows:

The decision is already raising further questions for employers, including how an employer should calculate personal leave for the purpose of cashing out that leave under an enterprise agreement or modern award under s 101(2)(c) of the Fair Work Act. These questions may be resolved by a Federal Government intervention or appeal on the basis of the Honourable Justice O'Callaghan's dissent.

Application for employers

This decision is particularly important for employers who employ shift workers. The current industry standard has been to pay workers who take personal/carer's leave an average days' pay (the standard pay usually being 7.6 hours). On the basis of the judgment, employers should review their current payroll system to ensure that personal/carer's leave is being calculated and paid correctly.

While we await a potential appeal or government intervention, this means that companies will need to ensure that shift workers are compensated for their entire shift on which a personal leave day is taken, and only one day is deducted from their allotted 10 days. In addition, employers need to be mindful that personal/carer's leave will accrue of a basis of days or part-days rather than hours worked.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.