LEGAL ALERT: Full Federal Court rules on sick leave test case

The full Federal Court has ruled that 12-hour shift workers are entitled to accrue 120 hours of personal/carer’s leave each year under the National Employment Standards (NES), rather than 76 hours, as argued by their employer and the Federal Industrial Relations Minister.

The NES provides 10 days of personal/carer’s leave per year of service, and is contained in s96(1) of the Fair Work Act 2004 (Cth).

The union argued that under the Act, the leave should be calculated by reference to the worker’s hours of work – their ‘working day.’ The ‘working day’ for the shift workers was 12 hours, rather than the historical industrial standard of 7.6 hour ‘work day’ for this purpose. This required the Court to consider the meaning of the word ‘day’ as it relates to the calculation of personal/carer’s leave entitlements.

The employer argued that the Act does not refer to a working day, but to its ‘industrial meaning’ of a ‘notional day,’ which meant an average 7.6 hour day based on the five-day work week.

The Full Court concluded that:

  • the definition of a ‘day’ should be a ‘working day,’ made by reference to the portion of a 24 hour period worked;
  • a ‘day’ of paid personal/carer’s leave is an authorised absence from work for a working day for a reason under s 97. Employees accrue ten such ‘working days’ under this entitlement per year;
  • the entitlement to paid personal/carer’s leave is not an entitlement to take personal/carer’s leave;
  • the accrual includes part-days, not only full days;
  • ‘ordinary hours of work’ in ss 96(2) and 99 distinguish ordinary hours from overtime hours;
  • the paid entitlement is to be calculated on the basis of ordinary hours under s 96(2);
  • the paid personal/carer’s leave accrues over the whole length of the employee’s employment to the extent that it is not ‘taken;’
  • the amount of paid personal/carer’s leave taken in a year is limited to the amount that has accrued, but is not otherwise limited.

The full decision can be accessed here.

Implications for Employers

 

  • This decision sheds light on a previously ambiguous interpretive issue regarding the calculation of leave entitlements.
  • There is a significant risk that shift workers, or employees whose ‘working day’ is more than 7.6 hours, have been reliant on the ‘notional day’ (7.6 hours) entitlement to personal/carer’s leave.
  • There is a significant risk that employees have been underpaid their entitlements to personal/carer’s leave, and may require adjustments to existing leave balances.
  • Employers should review and if necessary, up-date, their methods for calculating paid personal/carer’s leave.
  • This decision may have implications for other NES leave entitlements, including the annual leave.

This Newsletter is made available to our clients and interested parties to provide immediate access to information about important changes and developments relevant to employers. The information contained in this publication should not be relied on as legal advice and should not be treated as a substitute for detailed advice that takes into account particular situations and the particular circumstances of your business.


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