Earlier today, the High Court handed down its decision in Mondelez v AMWU [2020] HCA 29. The High Court’s decision means a “day” of personal leave is an average day for the worker not the specific day of absence. This interpretation of personal leave under section 96(1) of the Fair Work Act 2009 (Cth) is consistent with the way many payroll systems already provide for personal leave to accrue and be paid and avoids difficult changes to Employer payroll processes.
Mondelez v AMWU [2020] HCA 29.
The highly anticipated decision comes after the earlier Full Court of the Federal Court took a different and impractical view of personal leave requirements. The Full Federal Court’s construction, if followed, would have required a significant change in the leave accrual systems commonly used by employers, as it required that leave accrue in days, not hours. The decision was opposed by the Minister for Jobs and Industrial Relations, who intervened in the proceedings in support of Mondelez.
Background to the Full Federal Court proceedings
Mondelez commenced proceedings against the AMWU in the Federal Court seeking declarations that its method for adjusting accruals and paying personal/carer’s leave under its enterprise agreement complied with, and was more beneficial than, section 96 of the Fair Work Act 2009 (Cth)(the FW Act).
Under clause 24 of Mondelez’s enterprise agreement, employees working 12 hour shifts received 96 hours of paid personal leave per annum. When employees working 12 hour shifts took personal leave for a single 12-hour shift, Mondelez deducted 12 hours from their accrued leave balance. Consistent with this approach, over the course of one year of service, the employees accrued a quantum of leave which was sufficient to cover absence for eight, 12 hour shifts. Under Mondelez’s construction of s 96(1) of the FW Act, the 96 hours of personal leave per annum in their enterprise agreement was 24 hours better per year than the minimum required under s 96(1) of the FW Act. Mondelez’s full-time employees each worked an average of 36 hours per week or 7.2 hours per day.
Mondelez’s construction was based on the “industrial meaning” of the word “day”. That meaning is said to be a “notional day”, which is calculated based on an employee’s average daily ordinary hours over an assumed five-day working week. The average day being 7.2 hours (equivalent to a 36 hour week). By contrast, the AMWU contended that a day meant a “working day”, and as the employees worked 12-hour shifts, section 96 of the FW Act required that employees accrue 10 days of 12 hours of paid leave, totalling 120 hours a year.
Much to the concern of employers, the Full Federal Court favoured the AMWU’s construction, agreeing that the entitlement to a day’s paid personal/carer’s leave is an entitlement to be absent from work for the portion of a 24 hour period that would otherwise be allotted to work. The decision would have had significant implications around how leave is accrued (whether in days or hours), as well as how much leave employees accrue.
