News & Views

On 21 August 2019, the Full Federal Court of Australia handed down a landmark decision in Mondelez Australia Pty Ltd v the Australian Manufacturing Workers Union [2019] FCAFC 138 (Mondelez). Mondelez deals with the method of accruing and taking paid personal/carer’s leave in accordance with the National Employment Standards under the Fair Work Act 2009 (Cth) (FWA).

A significant number of enterprise agreements and payroll systems in the electrical contracting industry (and most other industries) provide for leave entitlements based on a set number of hours per year, rather than days. It should be noted that there is no reference to “hours” in section 96 of the FWA, which provides that for each year of service, an employee is entitled to 10 days of paid personal/carer’s leave. Such entitlement shall accrue progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

In Mondelez, a majority of the Full Bench found that:

1. employees (full time and part time employees) are provided with 10 working days of personal/carer’s leave for each year of service regardless of the number of hours worked each day or how many days worked per week;
2. leave is to be calculated in working days and not hours, with a working day being the portion of a 24-hour period that an employee would otherwise be working;
3. accordingly, a day of leave is not based on the employee’s average ordinary hours works, capped at 38 hours, but instead personal/carer’s leave accrues in days.

In light of the above, if an employee takes a day of personal/carer’s leave, a day would be deducted from the employee’s accrued leave. If the employee was to only take a portion of the day in personal/carer’s leave, the employer shall reduce the employee’s leave balance proportionally.

Take Home Message

Members should carry out a review of their payroll systems (and any other applicable systems), enterprise agreements, applicable awards and employment contracts for the accrual, taking and payment of leave.

If personal leave entitlements are accrued and deducted on an hourly basis, members should consider whether such provisions are consistent with the number of days required under the FWA with respect to the pattern of hours worked by employees. This is particularly the case as in Mondelez it was determined that an employee working three 12-hour shifts of ordinary hours per week, would be entitled to be paid for 12 hours per day of personal/carer’s leave taken.  

Note that the Australian Government and Mondelez Australia Pty Ltd have applied to the High Court of Australia seeking leave to appeal this decision. We will provide further updates on this as they become available.

For more information, please contact NECA Legal’s Senior Associate, Lauren Howe, on 1300 361 099 or email lauren.howe@neca.asn.au.