Today, the High Court handed down its decision in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union  HCA 29 allowing appeal from a judgment of the Full Court of the Federal Court concerning how the entitlement to paid personal/carer’s leave is calculated under section 96(1) of the Fair Work Act 2009 (“the Act”).
Section 96(1) of the Act 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“.
Mondelez Australia Pty Ltd (“Mondelez”) employs Ms Triffitt and Mr McCormack (“the employees”). Under their enterprise bargaining agreement, the employees each work, on average, 36 ordinary hours per week. They work an average of three 12-hour shifts per week. When the employees take paid personal/carer’s leave for one 12-hour shift, Mondelez deducts 12 hours from their accrued leave balance. Over the course of one year of service, the employees accrue paid personal/carer’s leave sufficient to cover eight 12-hour shifts. The employees (together with the Australian Manufacturing Workers Union) argued that section 96(1) of the Act entitles them to paid personal/carer’s leave sufficient to cover ten absences from work per year. That argument was accepted by a majority of the Full Court of Federal Court which held that a “day” in section 96(1) of the Act refers to “the portion of a 24 hour period that would otherwise be allotted to work” (“the ‘working day’ construction”).
On the construction adopted by the majority in the Full Court of the Federal Court, an employee working 36 ordinary hours in a week across three 12 hour shifts would be entitled 120 hours of paid personal/carer’s leave, whereas an employee working 36 hours in a week across five 7.2 hour shifts would only be entitled to 72 hours.
The issue on appeal was whether the word “day” in section 96(1) of the Act 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, or
- a “working day”, consisting of the portion of a 24 hour period that would otherwise be allotted to working and thereby authorising an employee to be absent without loss of pay on ten working days per year.
The majority of the High Court rejected the working day construction adopted by the Full Court of the Federal Court on the basis that it would “give rise to absurd results and inequitable outcomes”. The High Court held that the working day construction was contrary to the legislative purposes of the Act which is intended to provide fairness, flexibility, certainty and stability for employers and their employees.
According to the majority of the High Court, the working day construction would lead to unfairness between employees with different work patterns as an employee 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 High Court considered that the purpose of section 96 of the Fair Work Act 2009 is to protect employees against loss of earnings, and it does so by reference to their ordinary hours of work. As a result, the High Court held that the amount of leave accrued does not vary according to an employee’s pattern of work.
The High Court declared that:
“The expression ’10 days’ in section 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer’s leave accruing for every year or service equivalent to an employee’s ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee’s ordinary hours of work in a year. A ‘day’ for the purposes of section 96(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”.
This means that a full-time employee who works 38 hours a week over five days is entitled to the same amount of personal/carer’s leave as a full-time employee who works 38 hours over three days per week.