Federal Court Decision – Personal/Carer’s Leave Accrual

On 21 August 2019, a Federal Court decision (Mondelez Cadbury decision) changed the calculation method for accruing and taking paid personal/carer’s leave.  Whilst the decision may be appealed to the High Court the ruling reflects the current state of the law and must be applied by employers immediately.

In summary:

  • Ten days of personal leave a year must be accrued for all full-time and part time employees (if, via an Enterprise Agreement, your organisation offers higher rates of accrual, that will, of course, continue).
  • This accrual applies regardless of how many days or hours a full-time or part-time employee may work per week.  To accrue the minimum National Employment Standard (NES) personal/carer’s leave entitlement, ie ten days, personal leave will now accrue at 0.1923 days per week (equating to ten days per year).
  • When an employee takes a day of personal/carer’s leave they will be paid for the hours they would have usually worked on that day and their persona/carer’s leave balance reduced by one day.

For example, a part-time employee working four hours on a Tuesday and six hours on a Wednesday will accrue 0.1923 days per week of personal/carer’s leave.  If the employee takes a personal/carer’s leave day on a Tuesday they will be paid for four hours and their persona/carer’sl leave balance reduced by one day.  If they take a personal/carer’s leave day on a Wednesday they will be paid for six hours and their personal/carer’s leave balance reduced by one day.

 

What does this mean for employers?

Most payroll systems accrue personal/carer’s leave on an hourly basis.  Rather than expressing an employee’s leave entitlement in days or weeks, payroll software tends to record the accrual as an hourly amount.  Consequently, payroll systems generally accrue 76 hours of personal/carer’s leave per year for full time employees, and a pro-rata amount for part-time employees.

If your payroll system works in this way, you will need to ensure that:

  • 12-hour shift workers either accrue 120 hours of personal/carer’s leave per year (instead of 76) or, alternatively, only have 7.6 hours leave deducted whenever they are absent from an entire 12 hour shift;
  • similar treatment is afforded to other shift workers who work more than 7.6 ordinary hours in a day; and
  • part-time employees accrue a full ten working days per year (as opposed to a pro-rated amount based on their shorter working week).

The Fair Work Ombudsman is updating their site to clarify the situation and this link provides access to the latest information.

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