The high court last week, handed down a decision regarding how Personal Leave is accrued. This decision came as a result of an earlier decision that was handed down by the Fair Work Commission last year in August 2019.
The decision to how Personal Leave is accrued is also referred to as the Mondelez decision. This means that every employee whether working full time or part-time are entitled to 10 days a year irrespective of the number of hours worked. It also meant that personal leave would accrue in days even if an employee worked longer or shorter hours in the day.
This was considered a payroll nightmare as it exposed businesses to a huge number of underpayment claims. It was unfair to employees who worked full time and was impractical in its application. Hence the decision was appealed in the High Court but was overturned last week. The new personal leave high court ruling is that employees are entitled to 10 ‘notional days’ leave per year. The duration of a ‘day’ will be determined by identifying the 1/10th of an employee’s ordinary hours over a 2 week period. This equates to 1/26th of their total ordinary hours over the period of a year.
A few examples:
- Full-time employees working 38 hours a week or 76 hours a fortnight, would accrue personal leave based on a 7.6-hour ‘notional day’. This means through the course of a year, an employee would accrue 76 hours of leave or 10 x 7.6-hour notional days.
- Part-time employees working 20 hours a week or 40 hours a fortnight would accrue personal leave based on a 4-hour ‘notional day’, as opposed to 7.6 hours. This means that through the course of a year, the part-time employee would accrue 40 hours of personal leave or 10 x 4-hour notional days.
- Shift workers working varied patterns across a fortnight or month will have the value of ‘a day’ identified by their employers as 1/26th of the employee’s ordinary hours over the course of a whole year. This will make it easier as they can ignore the weekly or monthly variations in rosters and assess the total hours of work as a whole.
- Shift workers who work full-time shift (an average of 38 hours per week over the course of a year), will be entitled to 10 x 7.6-hour days each year.
This is a welcome outcome for employers who would have otherwise faced an increase in the personal/carer’s leave owed to employees.
You can read the complete Personal Leave high court ruling here.
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The information contained in this blog is general in nature. If you need some help navigating the rules and obligations around leave entitlements for your business or are unsure about how this information applies to your specific situation we recommend you contact us at VeiraMal Consulting to get started.