The High Court has overturned the Full Federal Court's controversial decision in Mondelez v AMWU [2019] FCAFC 138, about the meaning of a 'day' for the purposes of personal/carer's leave entitlements under section 96 of the Fair Work Act 2009 (Cth) (FWA).
The High Court declared that the expression '10 days' in section 96(1) of the FWA means:
an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26th of the employee's ordinary hours of work in a year.
The High Court majority (Chief Justice Kiefel and Justices Nettle and Gordon) accepted the arguments of Mondelez International and the Federal Government that a 'day' in section 96(1) of the FWA refers to a notional day, consisting of 1/10th of an employee's ordinary hours of work in a two-week period.
The High Court majority rejected the 'working day' construction accepted by the Full Federal Court on the basis that it gave rise to 'absurd results' and 'inequitable outcomes' and would be contrary to the FWA's legislative purposes of fairness and flexibility, the legislative history, and the Explanatory Memorandum to the FWA.
Therefore, in summary:
- Permanent employees will accrue personal/carer's leave based on their ordinary hours of work, which can be averaged over a two-week period (for standard hours) or over 12 months (for non-standard hours).
- Part-time employees accrue personal/carer's leave on a pro-rata basis, calculated according to their average ordinary hours of work (not 10 days of personal/carer's leave as proposed by the Full Federal Court).
- When taking personal/carer's leave, the number of ordinary hours taken should be deducted from the leave accrual (not a fraction of a day as proposed by the Full Federal Court).
The High Court's decision comes as a welcome relief to employers with non-standard shift arrangements and provides certainty on the calculation of personal/carer's leave entitlements under the FWA.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
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