Personal Leave Accrual Case goes to High Court

Written by: The Institute of Certified Bookkeepers

Personal Leave Accrual Case goes to High Court

Personal Leave Should be Accrued Pro-rata

We are very pleased to hear that the Federal Court Decision in the Mondelez v AMWU & Ors case is going to be appealed.

Both the employer and the Attorney-General for Australia have indicated major concerns with the interpretation, and the potential impact of the application of the law as indicated in the current decision.

There is significant information that indicates personal leave should be accrued in the same manner that it has been since the introduction of the Fair Work Act; i.e. a full time worker of 36 hours per week would be entitled to 10 days of full time (72 hours) of personal leave per year. Part time workers would accrue leave on a pro-rata basis. A shift worker working 3 days of 12 hour shifts would be entitled to personal leave equating to the same amount as “otherwise worked” – i.e. over a 10 day period they would have worked 6 × 12 hours (72 hours) – and should therefore also accrue 72 hours of personal leave per year.

Impact

ICB advises employers and our members not to change current practice.

Comment

We believe the Fair Work Ombudsman will now need to revert their website and advice to adhere to the same practice prior to the Federal Court decision until the appeal process has been decided.

Case Background

On 21 August 2019, the Full Federal Court of Australia handed down a decision regarding the accrual of personal leave for full time shift workers. The decision deals with the method of accruing and taking paid personal/carer’s leave for the purposes of the National Employment Standards under the Fair Work Act 2009.

Full-time workers are entitled to 10 working days personal leave under the National Employment Standards. The debate surrounds workers who work longer shifts, and have more actual days not working during the week. Confusion surrounds the calculation of personal leave in hours vs working days. The Fair Work Ombudsman has advised the following:

“For every day of personal/carer’s leave taken, an employer deducts a day from the employee’s accrued leave balance. If an employee takes a part-day of leave, then an equivalent part-day is deducted from the employee’s accrued leave balance.”

Fair Work has made a few comments in reaction to the case, and have also updated their information page regarding personal leave accrual. Details of the case ruling can be found here.

Note: ICB believes that the Fair Work Ombudsman website has been adjusted prior to the decision being finalised, and thus employers should not alter previous practices (as described below).

ICB Recommendation

ICB recommends employers continue to accrue a liability for personal leave based on the amount that a worker would have “otherwise been working” on that day.

For example:

  1. A part-time worker who works 3 days, 5 hours a day each week, would accrue 6 days of 5 hours of personal leave over a year – i.e. what they would have worked over a standard 10 days of “work time” – they would have worked 6 out of those 10, and for 5 hours per day. When they took personal leave for a day that they would have been working, they would be paid the same as if they were otherwise working (i.e. 5 hours).
  2. If a worker works 3 days of 12 hour shifts per week, then they would accrue 6 days of 12 hours. If they take personal leave on a day they would be working, then they get paid for 12 hours.
  3. If a worker works 5 days of 7.6 hours, then they would accrue 10 days of 7.6 hours. If they take personal leave on a day then they would be paid 7.6 hours.

This pro-rata leave attribution mathematically works in payroll by accruing personal leave at a rate related to the hours they work; i.e. nothing changes in payroll just yet..

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