High Court Decision on controversial Mondelez 'Leave' Case
On 13 August 2020, the High Court overturned a full Federal Court majority decision in Mondelez v AMWU  1,in which the Full Federal Court determined that the provisions contained in the National Employment Standards in the Fair Work Act,2 which provide that an employee is entitled to "10 days" paid personal/carer's leave, is an entitlement for both permanent full-time and part-time employees, and, in the case of part-time employees, is not required to be pro-rated.
Further, the Full Federal Court found that an employee that works a 12 hour shift will be entitled to receive 12 hours of pay, if they were to take a day of personal leave.
The High Court's decision clarifies the method of accruing and taking paid personal/carer's leave for the purposes of the National Employment Standards under the Act.
Mondelez Australia Pty Ltd (Mondelez) operates a Cadbury food manufacturing plant near Hobart, Tasmania. Under the enterprise agreement, the employees were employed to work 36 hours per week, where they worked ordinary hours in 12-hour shifts on an average of 3 shifts a week. Under the agreement, the employees were entitled to 96 hours of paid personal/carer's leave per year of service.
Dispute in the Interpretation of s 96(1)
After accruing enough leave for the year, the employee's claimed that section 96(1) of the Act actually entitled them to accrue ten 12 hour shifts of paid personal/carer's leave per year of service (or 120 hours) rather than the eight 12 hour shifts (or 96 hours) which they were entitled to under the agreement.
Section 96 of the Act provides that for each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer's leave, which accrues progressively during a year of service (according to the employee's ordinary hours of work).
The interpretation of the word 'day' was in dispute between the parties when calculating accrual. Mondelez argued that the word 'day' contained in s 96(1) of the Act does not refer to a calendar day but rather a 'notional' day. This meant that for employees working 36 ordinary hours per week, a 'notional' day would equate to 7.2 hours. The employees would therefore be entitled to ten such days, or 72 hours, of paid personal/carer's leave for each year of service.
The union, AMWU, on behalf of the employees, submitted that the 'day' under the relevant section should be interpreted as a 'calendar' day or rather, a 24 hour period. On this approach, this would allow the employees to be entitled to 120 hours personal/carer's leave per year, rather than the 96 hours provided in the agreement.
Full Federal Court Decision
In August 2019, the majority of the Full Court endorsed the concept of a 'working day' consisting of the portion of a 24-hour period that would otherwise be allocated to work. The Court emphasised that leave must be calculated in working days rather than hours.
The Full Federal Court reasoned that personal/carer's leave is a form of income protection (that is, it provides income when an employee is absent from work) and accordingly, the employee should be protected against loss of earnings for their "working day". In essence, it was held that the relevant employees were entitled to leave on the basis of ten 12-hour shifts per year being 120 hours.
This decision caused uncertainty for businesses in regard to calculating leave balances for part time employees and shift workers, as it was inconsistent with the historical understanding of personal leave accrual.
High Court Decision
Due to the potential inequities between employees and the enormous economic consequences on employers as a result of such a decision being made, the Industrial Relations Minister Christian Porter joined the appeal of the Full Federal Court's decision.
The question for the High Court was whether a "day" under the relevant section of the Act refers to a "notional day" (as argued by the employer and the IR Minister), or the "working day" approach which had been previously accepted by the Full Court.
Yesterday the High Court set aside the Full Federal Court's judgment.
The Bench further clarified that:
"What is meant by a "day" or "10 days" must be calculated by reference to an employee's ordinary hours of work."3
"10 days" in s 96(1) is two standard five-day working weeks. One "day" refers to a "notional day" consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week period."4
In its judgment, the High Court had regard to the objectives of the Act and stated that the "working day" construction by the AMWU would give rise to inequitable outcomes that would be contrary to the legislative purpose of the Act addition. The judgement states that "the stated objects show that the [Fair Work Act] is intended to provide fairness, flexibility, certainty and stability for employers and their employees."5
Impact of the High Court decision
The High Court decision has restored certainty for businesses and provides relief for employers who would otherwise have faced the complex task of reviewing current and past entitlements of their employees.
This decision will mean that employers do not need to make any changes to the usual way in which their employee's personal/carer's leave is calculated, namely that personal/carer's leave equals to 1/26th of an employee's ordinary hours per year (or pro rata for part-time employees). This decision also preserves the equality between workers on different rosters.
Changes to Modern Awards – Paid Pandemic Leave for Healthcare Workers amid COVID19
On 27 July 2020, the Full Bench of the FWC granted a temporary entitlement to paid pandemic leave for employees working in the aged care industry covered by the Aged Care Award 2010, Health Professionals and Support Services Award 2020 and the Nurses Award 2010.
This decision recognises the high risk environment that Healthcare workers currently face at work. However, this entitlement is only a temporary measure which will operate until 29 October 2020.
Right to paid pandemic leave is a 'workplace right' for Aged Care industry
The FWC have also determined that the right to take pandemic leave is now a protected workplace right under s 341(1)(a) of the Act. As such, employees cannot be treated adversely by exercising this right as per ss 342 and 343, as workers in this industry are now protected under general protections provisions and entitled to remedies under Pt 3-1 of the Act.
New incident notification obligations under Health & Safety laws in Victoria
On 28 July 2020, the Victorian Government introduced a new Regulation to the Occupational Health and Safety Act 2004 (namely the Occupational Health and Safety (COVID-19 Incident Notification) Regulations 2020), which extends the incident notification obligation of duty holders in Victoria.
Under the new regulation, employers and self-employed persons, with management or control of a workplace must notify WorkSafe immediately after becoming aware that:
- an employee, independent contractor, employee of the independent contractor or self-employed person has received a confirmed diagnosis of coronavirus (COVID-19) and;
- the employee, independent contractor, employee of the independent contractor or self-employed person has attended the workplace within the relevant infection period.
Penalties apply for failing to notify WorkSafe: up to $39,652 for an individual or $198,264 for a body corporate.
Worksafe can be notified of the above, by completing an online form or by simply calling their number 13 23 60.
1 FCAFC 138
2 (2009) Cth, section 96(1)
3 Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union; Minister for Jobs and Industrial Relations v Automotive, Food, Metals  HCA 29at .
4 Ibid at .
5 Ibid at .