Unpaid Trust Distributions: ATO's Rulings vs. Recent AAT Decision and What It Means for 2023
It has long been the ATO’s practice to treat a trust’s unpaid present entitlements (“UPE”) to a company as a loan for th...
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:
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.
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.
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
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.
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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