The High Court is set to consider the proper basis for the payment of personal leave, in a decision which will have broad impacts particularly for mining and supporting industries.
Q1 – How should personal leave be calculated?
In Mondelez Australia Pty Ltd v. AMWU & Ors  FCAFC 138, the Full Court of the Federal Court of Australia considered the question of how to calculate the payment for personal leave.
Under the Fair Work Act 2004, employees get 10 “days” paid personal leave (generally known as sick leave).
The question was whether the leave payment should be calculated based on:
- the hours of a “nominal” or average working day; or
- on the hours actually missed on the day of the leave.
In that case, employees worked a 36 hour week across three 12 hour shifts.
The employer argued that for each sick day, the employee ought be paid for 7.2 hours; that is, 36 hours divided by 5 working days. The Union argued that if an employee was sick for a 12 hour shift, they ought be paid for the full 12 hours.
On the employer’s case, shift workers would receive the equivalent of six sick days, compared with the 10 for an ordinary time worker; while on the Union’s case those shift workers would receive 120 hours of leave instead of the ordinary time worker’s 72.
In other words, both outcomes involved a degree of inequity.
Q2 – How many hours are there in a sick day?
The majority Full Court of the Federal Court found that the word “day” insofar as it relates to personal leave meant the absence from work during a 24 hour period. This meant that “day” means the number of hours that would have been worked if the employee had not been ill. One of the three justices dissented.
The consequence is that shift workers may receive more hours of sick leave than their ordinary time colleagues. This inequality was balanced, in the Courts mind, by the fact that neither worker would lose money under those arrangements. The Court does not appear to have considered the countervailing additional cost to employers, which could be considerable in the mining industry given the shift arrangements and high hourly rates.
The question, is not, however finally settled just yet. The employer has received special leave to appeal the decision to the High Court which will hear the case in early July. If the High Court upholds the decision, it then remains to be seen whether the government (which joined the proceedings as an interested party) will intervene with new legislation.
We will maintain a watching brief on this decision and provide an update on any developments. In the meanwhile, if you have any employment law questions or disputes, do not hesitate to contact one of our experienced employment lawyers either by phone on 07 4963 2000 or through our online contact form below.