Court preserves industry practice regarding personal leave accruals.
In a decision strongly welcomed by TTIA, and handed down on August 13, the High Court of Australia has allowed the appeal by Mondelez and the Minister of Industrial Relations against the 2019 Full Court of the Federal Court of Australia (Full Federal Court) decision on the meaning of ‘day’ in the entitlement to ‘10 days’ of personal/carer’s leave per year of service in the National Employment Standards.
Tree contractors who are Members of TTIA will be aware, from TTIA Circular 5/2019, that the Full Federal Court handed down a significant decision (August 21, 2019) concerning how personal/carer’s leave is accrued and paid.
The relevant section of the Fair Work Act, under consideration by the court, 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”. This provision had become a controversial issue at a Mondelez worksite where employees were typically engaged for 36 hours each week and worked those hours on three days of 12 hours each.
The Full Federal Court’s Majority Decision Significantly Concluded that:
- the meaning of ‘day’ for the purpose of this section meant the portion of a 24 hour period that would otherwise be allotted to work (a “working day”);
- An employee taking a day of personal/ carer’s leave was then entitled to be paid for the ordinary hours they would have worked on that ‘day’;
- Personal/carer’s leave there accrued and could be taken in days or part days; and
- The entitlement to 10 days per year is not subject to pro-rata based upon the employee’s ordinary hours of work (i.e. part time employees receive 10 days per year, the same as a full-time employee).
The Full Federal Court’s decision was unexpected to many, including the Federal Government, who supported the appeal of this decision to the High Court.
The High Court Decision
The High Court’s majority judgement observed that the interpretation in the Full Federal Court’s majority decision would entitle every employee, regardless of their pattern of work or distribution of hours to be absent without loss of pay on ten working days per year. This was referred to in the Federal Court’s decision as the ‘working day’ construction.
In overturning the Full Federal Court’s decision, the High Court majority judgement observed that the ‘working day’ construction would:
- give rise to absurd results and inequitable outcomes;
- would be contrary to the legislative purposes of fairness and flexibility in the Fair Work Act; and
- would be contrary to the extrinsic materials (such as the explanatory memorandum) and the legislative history.
Clarity On The Meaning Of ’10 Days’ Provided
The High Court decision includes a declaration on the meaning of the expression of ‘10 days’ in s96(1) of the Fair Work Act, as follows: “The expression ’10 days’ in s91(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 purpose of s96(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.”
What Does This Mean For Employers?
The High Court decision has clarified the meaning of ‘10 days’ for the purpose of the amount of personal/carer’s leave accrued in each year of service. Employers who continued to calculate personal/carer’s leave accruals as 1/26th of an employee’s ordinary hours of work will not need to make any adjustments.
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