Landmark ruling on employee leave entitlements

Landmark ruling on employee leave entitlements

A recent decision in the Federal Court highlights the need for employers to examine closely the way that they are accruing and paying their employees’ personal/carer’s leave, in order to ensure they are fulfilling their obligations under the National Employment Standards.

In Mondelez v AMWU & Ors [2019] FCAFC 138, Mondelez (which owns Cadbury) a case was brought by the Australian Manufacturing Workers Union (AMWU) on behalf of two shift workers at Cadbury’s Chocolate Factory in Tasmania, against Cadbury’s parent company, Mondelez Australia. This case centred on the meaning of the word “day” in the context of the Fair Work Act 2009. Section 96(1) of this Act states that for each year of service with his or her employer, an employee is entitled to 10 days of paid personal leave.

The two Cadbury employees had been working 12-hour shifts. Mondelez Australia said it should not have to pay beyond 6 days for the 12-hour shift workers; they wanted to pay the leave at the rate of 7.6 hours (i.e. the duration of a normal day’s work) rather than workers’ actual 12-hour shifts.
The employees and their union argued that because they work 12-hour shifts, their 10 days of paid personal leave should be remunerated on the basis of 12 hours a day.

The Federal Court ruled (by a 2-1 majority) in favour of the workers. In doing so, it established that all employees (including part-time employees) are entitled to 10 “working days” of personal/carer’s leave per year, regardless of how many hours the employees work per day or how many days are worked per week.

The Federal Court decision has the potential to impact significantly shift workers’ personal leave entitlement across Australia; it means that this class of employees may consider lodging underpayment claims. It also has implications for employers, many of whom do not presently accrue personal/carer’s leave in accordance with this recent decision.

Regardless of whether you are an employer trying to protect your business from potential claims by employees or you are an employee exercising your rightful claim for an entitlement, we can assist at AZ Legal.