High Court clarifies NES paid personal/carer's leave

Charles Power - Workplace Bulletin Portner Press

The entitlement to paid personal/carer's leave is calculated under s96(1) of theFair Work Act 2009 (Cth) (FW Act). This 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.

In an appeal decision handed down on 13 August 2020 (Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) HCA 29), the High Court has ruled that a ‘day’ in ‘10days’ in 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 period.

This decision provides guidance on the FW Act obligations of an employer with respect to accrual, payment and taking of paid personal/carer's leave

Accrual: Over a year of service an employee accrues a number of hours of paid personal/carer's leave equal to the number of ordinary hours the employee works in a two-week period. This is the case, regardless of whether their ordinary hours over this two-week period are worked across ten, six, or five days. If the employee’s ordinary hours in a two-week period vary because of their working patterns, the entitlement is 1/26th of the number of ordinary hours the employee works in a year.

Payment: When a day of personal/carer’s leave is taken, the employee is paid the amount they would have been paid if they worked a number of ordinary hours equal to one‑tenth of the ordinary hours the employee would have worked in a two‑week period (or if the employee’s ordinary hours in a two-week period vary because of their working patterns, 1/26th of the ordinary hours the employee would have worked in a year).

The timing and number of hours or days of leave taken does not affect this payment. Allemployees working the same number of ordinary hours in a year are to be paid the same for a day of leave, regardless of whether their ordinary hours over a two-week period are worked across ten, six, or five days in that period.

Deduction of leave when taken: When a day of personal/carer’s leave is taken, the employee’s accrued entitlement is reduced by the actual number of ordinary hours the employee would have worked on that day. This means in some cases, because of the employee’s pattern of work or distribution of hours, the paid personal/carer's leave entitlement will not entitle the employee to be absent without loss of pay on tenworking days per year.

The same principles apply to the entitlement to paid annual leave under s87(1) of the FW Act.However, the FW Act’s provisions dealing with unpaid pre-adoption leave, unpaid carer's leave, compassionate leave, andunpaid family and domestic violence leave are different. In respect of these entitlements a ‘day’ is not calculated according to an employee's ordinary hours of work. Rather, they authorise an absence for the portion of the 24-hour period that would otherwise be allocated to working.

The High Court rejected the argument that a ‘day’ in ‘10days’ in s96(1) referred to a ‘working day’, consisting of the portion of a 24-hour period that would otherwise be allotted to working, thereby authorising an employee to be absent without loss of pay on tenworking days per year. Anemployee whose hours are spread over fewer days with longer shifts would be entitled to more paid personal/carer's leave than an employee working the same number of hours per week spread over more days. The Court cited a number of unfair anomalies that would arise from this construction:

  • An employee working 36 ordinary hours in a week in three shifts of 12 hours would be entitled to ten 12-hour days of paid personal/carer's leave per annum, or 120 hours, whereas an employee working 36 ordinary hours in a week in five days of 7.2hours would be entitled to ten 7.2-hour days of paid personal/carer's leave per annum, or 72hours. This is despite the fact the first employee would be less likely to need to take paid personal/carer's leave on a working day given they work on fewer days than the second employee.
  • A part-time employee working one day per week for 7.6 hours would be entitled to ten days of paid personal/carer's leave per annum (the same as anemployee working 7.6 hours five days a week) and would accrue the leave at five times the rate of a full-time employee.
  • A part-time employee who works 12 ordinary hours per week as a single shift would accrue 120 hours of leave (tenabsences of 12hours) – almost double the 72 hours of leave a full‑time employee working 36 ordinary hours per week over five 7.2‑hour days would accrue in a year.
  • A person who was employed one day per week by anumber of employers would be entitled to ten days of paid personal/carer's leave from each employer.
  • An employee who takes a part day of paid personal/carer's leave could take two hours’ leave which would be measured as a fraction of a day, not necessarily in hours, whereas an employee working shifts of different hours who takes the same number of hours of paid personal/carer's leave will have different portions of the day deducted from their accrued leave.

 Important information about accruing paid sick and carer's leave

On 13 August 2020, the High Court of Australia handed down a decision clarifying how paid personal/carer's leave is accrued and taken under the National Employment Standards (NES).

In this decision the High Court clarified that:

  • the entitlement to 10 days of personal/carer's leave under the NES is calculated based on an employee's ordinary hours of work, not working days
  • 10 days of personal/carer's leave is calculated as 1/26 of an employee's ordinary hours of work in a year.

The High Court's decision overturns a decision made by the Full Federal Court of Australia in August 2019. In that decision, the Full Federal Court held that personal/carer's leave accrues in working days, not hours.