Background
On 21 August 2019, the Full Federal Court of Australia handed down a decision that dramatically shifted the accumulation of personal/carer’s leave away from the historic approach used by employers. Before the decision, full-time employees received 10 days of personal/carer’s leave and part-time employees received a pro-rated amount in line with their ordinary hours of work.
The decision clarified that a “day”, under the Fair Work Act, meant the amount of time in a 24-hour period that is allotted to work. The consequence of this clarification was that a “day”, for the purposes of leave accruals, had been ordinarily equal to 7.6 hours (based on 38 hours worked per week). Therefore, this meant that for an employee working 12 hours in a day, they were now entitled to 10 days’ worth of 12 hours (120 hours) of personal/carer’s leave for each year of service.
Moreover, part-time employees who historically received a pro-rated amount of personal/carer’s leave in line with their ordinary hours of work, were now entitled to receive 10 days based on the number of ordinary hours they worked in a day. For example, a part-time employee working 7.6 hours per day, 2 days per week, would now be entitled to 10 days of 7.6 hours (76 hours).
High Court decision
The company involved in the case, Mondelez International, appealed the Full Federal Court’s decision to the High Court of Australia, with the Minister for Industrial Relations Christian Porter intervening on behalf of the Federal Government. On 13 August 2020, the decision in Mondelez v AMWU [2020] HCA 29 was handed down by the High Court.
A majority High Court has upheld the appeal and overturned the ruling handed down by the Full Federal Court in August 2019.
This now means that employers can revert to the historic way of calculating personal/carer’s leave: full-time employees are entitled to 10 days per annum and part-time employees receive a pro-rated amount based on their ordinary hours of work.
What should your business do now?
Since the August 2019 decision, several employees have likely received increased amounts of personal/carer’s leave accruals. Below are three broad options that may be considered, following the appropriate advice to ensure the solution you implement is both legal and practical:
- The additional personal/carer’s leave accruals remain in place for impacted employees and they are notified effective immediately all future personal/carer’s leave accruals will revert to the previous accrual method in place. It is important to communicate why this change is occurring to the employee.
- Notify impacted employees that there has been a High Court ruling and this means that their personal/carer’s leave entitlement has changed. You may consider winding back the accruals to the correct level, but employees must be informed of the adjustment before any changes are made to leave balances.
- Where the additional accruals have been used by employees, you may be able to seek repayment for the overpayments made or reach some agreement with employees. This option requires further advice on individual situations as contracts, awards and other industrial instruments will impact the ability to recover overpayments.
Lastly, any change made to employment agreements, policies or other company documents after the August 2019 decision should be amended to reflect the High Court’s decision.
If you need assistance navigating how this impacts your business, we can help you.
Contact us on enquiries@ourhrteam.com.au or on 1300 168 747.
DISCLAIMER: This is not intended as legal advice but rather general information to assist employers with the recent change to personal/carer’s leave. Each business and employee are different and needs to be assessed on their individual circumstances.