Employer Alert

How will the changes impact your business?

Late last year, the Fair Work Information Statement was refreshed to reflect ‘important information about an employee’s pay and conditions’. It sets out the National Employment Standards (NES) clearly and in a format that is easy for the reader to understand. Particularly, the entitlements for full-time, part-time and casual employees.

‘Personal leave (sick or carer’s leave) — 10 days paid leave per year’ entitlement for both full-time and part-time employees — is now the law.

This change is due to the Mondelez Australia Pty Ltd v AMWU [2019] FCAFC138 (Mondelez decision) handed down by the Full Federal Court on 21 August 2019. An appeal of the Mondelez decision will be heard by the High Court sometime this year.

Although subject to change, depending on the decision made by the High Court, the Fair Work Information Statement and the information published on the Fair Work Ombudsman website about personal/carer’s leave both reflect the state of the law effective 21 August 2019. What to do?

This Employer Alert provides:

  • What you need to know – ‘An overview of the changes to personal/carer’s leave’
  • A short synopsis of the Mondelez decision to help with understanding and putting the changes to personal/carer’s leave into context – ‘It’s all in a ‘working day’!’
  • What you need to consider doing to comply with the law as it now stands.

An overview of the changes to personal/carer’s leave

  1. Accrual of personal/carer’s leave
    Personal/carer’s leave is calculated and recorded as accrued ‘days’ no longer in ‘hours’. By way of example, for every 5.2 weeks, an employee accrues one (1) day of personal/carer’s leave.
  2. Taking and deducting personal/carer’s leave
    Regardless of whether an employee works 4, 6, 8 or 12 ordinary hours in a day, the employer will deduct one (1) personal/carer’s leave ‘day’ for each leave day taken by the employee.
  3. Part-time employees are entitled to 10 working ‘days’ personal/carer’s leave per year of service
    The same as your full-time employees. A part-time employee’s entitlement to personal/carer’s leave is no longer calculated on a pro-rated number of ordinary hours of work.
  4. Deducting days and part-days from personal/carer’s leave
    Employees may also take part-days of paid personal/carer’s leave. A part-day is calculated as a ‘fraction’ of the employee’s ordinary hours of work for that day.

Example: How to deduct a day and calculate a part-day’s leave

Mary has an accrued personal/carer’s leave balance of 6½ days. Mary works a rostered 38 hour week. Her rostered hours are:

Monday Tuesday Wednesday Thursday Friday
8.0 hours 8.0 hours 8.0 hours 10.0 hours 4.0 hours


Due to illness, Mary is absent from work for a part-day on Thursday (5 hours) and for a full working day on Friday (4 hours).

Mary is entitled to paid personal/carer’s leave. Mary is paid personal/carer’s leave for a part-day on Thursday (5 hours) and for a full working day on Friday (4 hours).

Mary’s personal/carer’s leave balance will be reduced by 1½ days, leaving a balance of 5 days personal/carer’s leave.

  1. Overtime hours

An employee is entitled to payment at the base rate of ordinary hours of work. This does not include overtime.

Any overtime an employee would have been required to work, had the employee not been on personal/carer’s leave, helps to explain why the accrual of paid personal/carer’s leave under the Fair Work Act 2009 (Cth) (FW Act) is expressed in terms of ‘days’ and not ‘hours’.

The Court held that the intention must be to authorise employees to be absent, not only for their ordinary hours of work but also for any overtime hours they would otherwise have been required to work. This means that the employee is authorised to be absent from work for the portion of a 24 hour period that would otherwise be allotted to work (the working day), irrespective of whether that work is ordinary time, or overtime.

It’s all in a ‘working day’ (Mondelez decision)

The Issue

Mondelez’s enterprise agreement provides that employees who work 12-hour shifts will be entitled to 96 hours of paid personal/carer’s leave per annum.

When a shiftworker takes paid personal/carer’s leave for a single 12-hour shift, Mondelez deducts 12 hours from their accrued personal/carer’s leave balance.

Over the course of one (1) year of service, shift workers accrue personal/carer’s leave that is sufficient to cover only 8 days (8 x 12- hour shifts = 96 hours). Consequently, 2 days short of the personal/carer’s leave entitlement under the NES. (Under the hierarchy of industrial instruments, the NES over-rules an enterprise agreement).

The Dispute

The dispute between Mondelez and the Union was about the meaning of the word ‘day’ under section 96 of the FW Act.

Mondelez submitted that a ‘day’ is a ‘notional day’ consisting of an employee’s average daily ordinary hours based on an assumed 5 working days.

The Union submitted that a ‘day’ is a ‘calendar day’ or a 24 hour period that allows employees to be absent from work without loss of pay on 10 calendar days per year.

The Decision

The Full Court rejected the ‘notional day’ argument and ruled in favour of the ‘working day’. A number of conclusions were reached by the Court.

Key points summarised

  1. The purpose of paid personal/carer’s leave is a form of income protection for all employees (except casuals) for periods of illness, injury or an unexpected emergency as described in section 97 of the FW Act (When can paid personal/carer’s leave be taken?)
  2. The entitlement to paid personal/carer’s leave is not an entitlement to take paid personal/carer’s leave. The leave can only be taken by the employee in the circumstances set out in section 97 of the FW Act (When can paid personal/carer’s leave be taken?)
  3. The employee must be paid at least the full amount that would have been payable had the employee not taken leave and been at work. That is, the amount the employee has foregone due to taking personal/carer’s leave (section 100 of the FW Act).
  4. A ‘day’ under section 96(1) of the FW Act refers to the portion of a 24-hour period that would otherwise be allotted to work (a working day).
  5. An employee (full-time and part-time) accrues an entitlement to be absent from work for periods of illness, injury or an unexpected emergency for 10 ‘working days’ for each year of service.
  6. For every day of paid personal/carer’s leave taken, a ‘day’ is deducted from the employee’s accrued leave balance.
  7. An employee may take a part-day of paid personal/carer’s leave, and an equivalent part-day is deducted from the employee’s leave balance.

Ruling set for appeal

The High Court will hear an appeal of the Mondelez decision on the method of accruing and taking paid personal/carer’s leave under the NES. Until the High Court hands down its decision (probably in the latter half of this year), the decision made by the Full Federal Court stands and the law is effective 21 August 2019.

Recommendation

Now is the time to consider what action to take to meet your compliance with the law.

What you need to consider doing now to comply with the law

  1. Change in accrual of personal/carer’s leave
    How to calculate the accrual of 10 ‘working days’ per year for your full-time and part-time employees. What adjustments need to be made to your payroll system? The Fair Work Ombudsman website provides some good examples on calculating an employee’s personal/carer’s leave entitlement in working days.
  2. Change in taking personal/carer’s leave (days and part-days)
    What procedures/processes will you put in place to administer the changes in the accrual and taking of paid personal/carer’s leave?
  3. Communication to your team
    How will you communicate the changes to personal/carer’s leave entitlements to your permanent full-time and part-time employees?
  4. Do you require assistance to meet your compliance with the law?
    Ulton is your business partner. Our experienced HR and Bookkeeping teams can advise and support you with your HR/IR and Payroll concerns. Ulton works with you. We understand what every business needs to meet its employer obligations, comply with legislation and importantly mitigate business risk.

Watch this space in relation to the High Court Appeal. An update to this blog post will be published when the High Court's decision is handed down. 

Contact Christine Guy, HR Consultant on (07) 4154 0413 or email cguy@ulton.net


References

Fair Work Act 2009 sections 96 and 97

Fair Work Ombudsmen website

Mondelez Australia Pty Ltd v AMWU [2019] FCAFC 138

Mondaq Australia: All in a day’s work: A landmark decision on personal/carer’s leave entitlements by Erin Lynch, Vincent Young – 18 October 2019

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