High Court – Mondelez decision clarifies the construction of personal carer’s leave for employers
On 13 August 2020, a High Court majority overturned the Full Federal Court’s judgment in the well-publicised decision of Mondelez v AMWU.
Last year’s judgement of the majority of the Full Federal Court confirmed that personal/carer’s leave was to be accrued and taken by reference to “days”. The result of this decision was that two part-time shift workers (who worked 3 x 12 hour shifts per week) were entitled to 120 hours paid personal carer’s leave per annum. The High Court, in reaching its recent decision, indicated that the Federal Court’s previous construction of s 96 of the Fair Work Act 2009 produces “absurd results” and “inequitable outcomes”.
The High Court rejected the Federal Court’s construction of “working day” and instead clarified:
“The expression ’10 days’ in s 96(1) of the Fair Work Act 2009 (Cth) 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 1/26 of the employee’s ordinary hours of work in a year. A ‘day’ for the purposes of s 96(1) refers to a ‘notional day’, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period.”
The High Court decision commented that its construction of s 96 (“the ‘notional day’ construction”) is consistent with the “legislative purposes of the Fair Work Act, the extrinsic materials and the legislative history”.
Impact of this decision
Following this decision, the previously assumed position in relation to the accrual of personal/carer’s leave has been confirmed. This means that an eligible employee for each year of service accrues paid personal/carer’s leave based on the number of ordinary hours the employee works in a two-week period. For example:
- a full-time employee working 38 ordinary hours spread across 5 days per week (or an average of 7.6 ordinary hours per day), will accrue 76 hours of personal/carer’s leave in a year (being 10 ‘notional’ days of 7.6 hours); or
- a part-time employee who works 36 ordinary hours per week (or an average of 7.2 ordinary hours per day when spread across 5 days), will accrue 72 hours of personal/carer’s leave in a year (being 10 ‘notional’ days of 7.2 hours).
There was a concern following the Full Federal Court decision in Mondelez about the impact of the decision on the accrual of annual leave, as the annual leave provisions in the Fair Work Act 2009 do have similarities with the personal/carer’s leave provisions, albeit that the annual leave provisions refer to ‘weeks’ rather than ‘days’ in terms of the entitlement. This decision should ease employers’ minds with respect to the ‘absurd’ outcomes that were possible had the Full Federal Court position been maintained.
Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.