Published by Australian Bookkeepers Network
9 September 2019
For bookkeepers who handle client payroll, last month the Full Federal Court handed down its decision in Mondelez v AMWU  FCAFC 138, where it rejected the position put by Mondelez (the employer) that employees are entitled to personal/sick leave based on an average of their ordinary hours worked, and only up to a maximum of 76 hours per year. This is the widely-held view of most employers pursuant to the Fair Work Act 2009. Under this Act, the entitlement to sick leave is 10 days per year. Accordingly, the common approach taken when accruing personal leave was to accrue 76 hours per year (based on the premise that this equates to 10 days i.e. 7.6 hours per day, for a 38-hour working week).
The Federal Court, however, confirmed that personal leave is required by the Fair Work Act to be accrued and taken by reference to “days” (10 days per year) rather than a notional number of average hours. Consequently, Mondelez employees who worked three 12-hour shifts of ordinary hours per week are entitled to be paid for 12-hours per day of personal leave taken, rather than only 7.2-hours per day as was argued by Mondelez (i.e. 36 hours that they worked divided by 5 days per week).
This new interpretation is at odds with employers across a range of industries who provide for leave entitlements in enterprise agreements and payroll systems as a set number of hours per year, rather than 10 days per year. This approach is a hangover and is consistent with the former Workplace Relations Act, where the entitlement to leave was based on a number of hours. The Fair Work Act however expresses the entitlement in terms of days.
The key points from the Federal Court’s ruling include:
As per the Mondalez case, an employee works 3 x 12-hour shifts of ordinary hours
Tim and Jake both work 38-hour weeks for the same employer. Tim works 5 days for 7.6 hours, while Jake works 4 days for 9.5 hours.
Kate works three x 9 hour days (Monday to Wednesday) and one x 7 hour day (on Friday)
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