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Important decision defines what a leave day is for NES purposes

By Portner Press on September 2nd, 2019
  1. Termination of Employment
  2. Unfair Dismissal

The National Employment Standards (NES) in the Fair Work Act 2009 (Cth) provide for a minimum entitlement for all employees (other than casual employees) to 10 days of paid personal/carer’s leave for each year of service with his or her employer.

The issue that has bedevilled some employers is how to measure ’10 days’. The Full Federal Court has recently issued a ruling, Mondelez v AMWU (2019), which appears to resolve the question – subject to any appeal to the High Court.

Mondelez, formerly Cadbury, argued that it should only pay its employees for 76 hours of personal/carer’s leave for each year of service, based on 10 days’ work at 7.6 hours per day.

As many of its employees work 12-hour days, this meant that they would not receive their full daily pay rate for any personal/carer’s leave days they took off.

The Court has ruled that a ‘day’ for the purposes of the NES entitlement to paid personal/carer’s leave refers to a working day, i.e. the portion of a 24-hour period that would otherwise be allotted to work.  Therefore a day of paid personal/carer’s leave is an authorised absence from work for a working day.

An employee accrues an entitlement to paid personal/carer’s leave for 10 such working days for each year of service. For every day of paid personal/carer’s leave taken, a day is deducted from the employee’s accrued leave balance.

The NES entitlement to a day’s paid personal/carer’s leave is an entitlement to be absent from work for the portion of a 24-hour period that would otherwise be allotted to work.

This has the outcome shown in the table below:

  What is the employee’s NES entitlement when he or she takes a day of personal/carer’s leave? What deduction does the employer make to the employee’s NES entitlement when he or she takes a day of personal/carer’s leave? How would the employee deplete his accumulated NES leave balance in his or her first year of service?
Employee works 36 ordinary hours over 5 days per week – an average of 7.2 hours a working day Payment for 7.2 hours at their base rate of pay Deduct 7.2 hours from the accrued paid personal/carer’s leave balance By taking leave from the 7.2 ordinary hours the employee would have worked on 10 calendar days
Employee works 36 ordinary hours over 3 days a week – an average of 12 hours a working day Payment for 12 hours at their base rate of pay Deduct 12 hours from the accrued paid personal/carer’s leave balance By taking leave from 10 12-hour shifts on 10 separate calendar days
Employee works an average of 36 ordinary hours per week in a pattern of 4 days of 8 hours and one day of 4 hours. Payment for the ordinary hours that they were rostered to work on that day i.e. either 8 hours or 4 hours Deduct the number of ordinary hours that the employee was rostered to work on the day of leave i.e. either 8 hours or 4 hours By taking leave from the ordinary hours that the employee was rostered to work on 10 calendar days – N.B. i.e. if the employee happens to fall ill only on the days when rostered to work 4 hours, the annual NES entitlement will be 40 hours’ paid leave

Although this case concerned NES paid personal/carer’s leave, it will also apply to paid annual leave.

It is worth noting that the Full Court decision was not unanimous. Justice O’Callaghan provided a different opinion. This judge was of the view that, because the NES entitlement to be paid for personal/carer’s leave was founded on ordinary hours of work, then the entitlement to 10 days, or 2 weeks, of leave for each year of service under the NES must correspond with ordinary hours of work each week.

The entitlement to payment should not vary depending on the spread of an employee’s ordinary hours of work, rather what was important was the number of ordinary hours the employee worked on average each week over a year. A full-time employee who works 38 hours a week over five days (Monday to Friday) should accrue the same amount of leave in terms of hours as a full-time employee who works 38 ordinary hours over four days per week. Over a year of service both employees should accrue 76 hours of paid personal/carer’s leave.

This dissenting judgment might be the basis for an appeal.

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