Authors: Tim Lange & Professor Andrew Stewart
On 21 August 2019, the Full Court of the Federal Court handed down a decision clarifying that personal leave under the NES is calculated in units of days and part-days (not hours).
Tim Lange, Partner, Professor Andrew Stewart, Consultant, and Mark Caile, Lawyer, review the decision and the implications for employers.
The decision of the Full Court of the Federal Court in Mondelez v AMWU [2019] FCAFC 138 has (for now) resolved a persistent debate about how personal leave ( or “personal/carer’s leave” as it is more formally known is to be calculated under the National Employment Standards (NES). The ruling also has significant implications for the calculation of an entitlement to annual leave under the NES.
Legislative framework
Section 96(1) of the Fair Work Act 2009 (Cth) (FW Act) states that “an employee is entitled to 10 days of paid personal/carer’s leave” for each year of service with his/her employer. However, the FW Act does not define a “day” for this purpose. Further complexity is created by inconsistent provisions within the FW Act. For example, s 96(2) states, “paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work”.
Section 99 also states that if an employee takes a period of paid personal leave, the employee must be paid at their base rate of pay for their “ordinary hours of work in the period”.
Under the previous Workplace Relations Act 1996 (WR Act), an employee accrued personal leave at the rate of 1/26th of nominal hours worked in a year (equating to two weeks of personal/carer’s leave per annum for a full-time employee).
The dispute in Mondelez
In October 2017, the food manufacturer Mondelez applied to the Fair Work Commission (FWC) for approval of an enterprise agreement which stated that employees accrued up to 96 hours’ paid personal leave per annum if they were employees who worked 12-hour shifts. The Agreement provided for employees who did not work 12-hour shifts to accrue 80 hours of paid personal leave per year. The FWC queried whether or not these accrual rates satisfied the NES for employees who worked 12-hour shifts, as part of a working week comprising 36 ordinary hours. Mondelez argued that an accrual rate of 96 hours per year exceeded the NES entitlement to “10 days” for employees who worked 12-hour shifts, because for workers on a 36-hour week, “10 days” in the NES should be read as meaning 10 periods of 7.2 hours each, or 72 hours of leave per year.
