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Perspective

Huge win for employers – personal leave ruling overturned by High Court of Australia

Nina Hoang
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In breaking news, the leading case of Mondelez v AMWU [2019] FCAFC 138 which established the principle that personal leave is paid depending on days and not hours, has been overturned to the satisfaction of employers everywhere.

In the Full Federal Court, it was argued by the AMWU that the correct interpretation of the National Employment Standards is that employees get 10 personal leave days per year and this should be paid out for whatever hours they were rostered to work. This was problematic because it meant that employees who were working part time could be paid more personal leave than full time employees based on how many hours they were working in a shift. In this case, the employees were working 12 hour shifts and the Full Federal Court accepted that they were entitled to 120 hours of personal leave compared to regular full time employees who are only entitled to 76 hours of personal leave.

The case was appealed to the High Court of Australia by Mondelez and the Federal IR Minister Christian Porter. A majority of the High Court (Chief Justice Susan Kiefel, Geoffrey Nettle and Michelle Gordon) dismissed the interpretation by the Union and the Full Federal Court as it went against the purpose and objectives of the Fair Work Act 2009 (Cth) and that “it would give rise to absurd results and inequitable outcomes.”

The following was determined by the High Court:

  • 10 Days refers to two standard five day working weeks
  • One day is a ‘notional day’ and represents 1/10 of the employees ordinary hours in a fortnight or 1/26 of an employee’s ordinary hours of work per year

Therefore, for any day an employee takes personal leave they can only be paid one-tenth of their ordinary hours of work per a fortnight.

In this case the employees worked 36 hours per week through three 12 hour shifts. Based on the High Court’s construction, instead of receiving 12 hours per day of personal leave, they are only entitled to 7.2 hours for that day.

This is a much more reasonable interpretation and will avoid employees purposefully taking personal leave on shifts where they are rostered for longer hours.

Key points

  • Personal leave to be determined on hours not days
  • Personal leave will need to be applied uniformly to all employees

Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 (13 August 2020)

Nina Hoang
Published:

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