High Court clarifies calculation of paid personal/carer’s leave

17 August 2020

A majority of the High Court of Australia has clarified that employees who work longer hours over a shorter number of days in an ordinary working week are not able to use those hours as a basis for quantifying their entitlement to 10 days of paid personal/ carer’s leave.

The background

National system employer, Mondelez Australia Pty Ltd (Mondelez) operates food manufacturing plants in Australia. Ms Triffitt and Mr McCormarck are national system employees of Mondelez and they each work, on average, 36 hours a week in shifts of 12 hours.

Section 96(1) of the Fair Work Act 2009 (Cth) (FW Act) provides that for each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.

A dispute arose as to whether Mr Triffitt and Mr McCormarck were entitled to be paid 12 hours per day for leave or whether such entitlement was limited to 7.2 hours (being the average hours per day assumed over a five-day working week).

Full Federal Court decision

On 21 August 2019, the Full Federal Court dismissed Mondelez’s originating application for declaratory relief and held that “day” in s 96(1) of the FW Act refers to “the portion of a 24 hour period that would otherwise be allotted to work”.

Mondelez and the Minister for Jobs and Industrial Relations appealed to the High Court on the basis that the Federal Court majority erred in construing “day” in s 96(1) as a “working day”.

Issues before the High Court

Accordingly, the High Court was required to consider whether, for the purposes of s 96(1) of the FW Act:

  1. “day” in “10 days” refers to a “notional day” being one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week period (Notional Day Construction); or
  2. a “working day” consisting of the portion of a 24-hour period that would otherwise be allotted to working and thereby authorising an employee to be absent without loss of pay on ten working days per year (Working Day Construction).

High Court decision

In allowing the appeal and setting aside the Full Federal Court decision, Kiefel CJ, Nettle and Gordon JJ (comprising the majority of the High Court) inter alia:

  1. accepted the Notional Day Construction and consequently rejected the Working Day Construction as the latter would enable inequitable outcomes which is contrary to the legislative purpose of fairness and flexibility in the FW Act;
  2. observed that all employees working the same number of ordinary hours accrue paid personal/carer’s leave at the same rate regardless of whether their ordinary hours over a two-week period are worked across ten, six or five days in that period;
  3. observed that the Notional Day Construction conforms with the FW Act more broadly having regard to the similarities between paid personal/carer’s leave and the annual leave scheme which is progressively accrued according to an employee’s ordinary hours of work; and
  4. referred to the Explanatory Memorandum addressing paid personal/carer’s leave which acknowledged, inter alia, the following:
“….by relying on an employee’s ordinary hours of work, the Bill ensures that the amount of leave accrued over a period is not affected by differences in the actual spread of an employee’s ordinary hours of work in a week”

Implications for you

Employees who decide to work fewer days with longer shifts in an ordinary working week will not be entitled to greater paid personal/carer’s leave than those employee working standard hours of work distributed over a usual five-day working week.

Accordingly, employers should be cognisant that their obligations extend to either paying one-tenth of the equivalent of an employee’s ordinary hours of work during a two-week period or 1/26 of an employee’s ordinary hours of work in a year.

This article was authored by Simon Black, Laura Sowden and Lucinda Touma.

A copy of the High Court decision can be located here.

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