In a significant victory for Australian employers, the High Court has ruled in favour of Cadbury manufacturer Mondelez Australia Pty Ltd clarifying the meaning of the word “day” in the context of personal/carer’s leave entitlements under the Fair Work Act 2009 (Cth) (FW Act).

The entitlement to “10 days” of personal/carer’s leave contained in section 96(1) of the FW Act has ordinarily been interpreted to mean 76 hours of leave for full time employees per year and pro-rated for part time employees.

However, the Full Federal Court had previously held that the word “day” did not equate to a notional “working day”. Instead, “day” had its “ordinary meaning” (i.e. a 24-hour period). This interpretation would result in a full-time or part-time employee being entitled to personal/carer’s leave equivalent to the number of ordinary hours they would have worked in ten 24-hour periods.

For Mondelez, this meant that a day worker who worked 36 ordinary hours per week over five days of would be entitled to a total of 72 hours annually of paid personal/carers leave. However, a shift worker working 36 hours per week in a pattern of three 12-hour shifts per week would be entitled to a total of 120 hours.

Broader implications of this decision included that:

employees working the same number of weekly hours could be entitled to a different number of hours of leave depending on the pattern of hours worked;
part time employees could be entitled to at least the same number of hours of leave as a full-time employees (creating a disincentive to offer part-time work); and
payroll systems that generally accrue personal/carer’s leave on an hourly basis would need to be updated.

Mondelez appealed the decision to the High Court. A majority of the High Court agreed that the Full Federal Court interpretation “would give rise to absurd results and inequitable outcomes, and…be contrary to the legislative purposes of fairness and flexibility” of the FW Act.

The High Court declared that:

“A ‘day’ for the purposes 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.”

In practice, this means that an employee who works a 36-hour week over three 12-hour shifts would accrue the same amount of leave as an employee working five 7.2 hour shifts per week. The final words go to the High Court:

The notion of fairness encompasses fair treatment as between employees according to their ordinary hours of work, regardless of the pattern in which those hours are worked. Fairness and enforceability may both be served by employers and employees both being able to know, at any point in time, precisely how much paid personal / carer’s leave an employee has accrued.

Jasmine O'Brien
Principal
T +61 3 9611 0149 l M +61 401 926 108
E: jobrien@sladen.com.au

Jordan Nichols
Lawyer
T +61 3 9611 0130
E: jnichols@sladen.com.au