Personal Leave Returns to the Status Quo: High Court overturns Leave Decision

Posted on 14/8/2020

HR & Recruitment

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Overview:

The High Court has provided long-awaited clarity on the accrual of personal leave under the National Employment Standards.

This week the High Court overturned what it described as an “absurd decision” of the Full Federal Court in the Mondelez (Cadbury) case, providing long-awaited clarity on the accrual of personal leave under the National Employment Standards.

In its ground-breaking decision, the High Court has rejected arguments that the Fair Work Act’s minimum 10 days paid personal leave should be given to permanent employees regardless of the number of days worked per week or number of hours per day. Last year’s decision of the Full Federal Court, detailed in this previous Insights article meant that a permanent part time employee was entitled to 10 days personal leave per year, rather than a “pro rata” amount based on their actual working hours.

The High Court has now clarified that employees are entitled to 10 “notional days” of personal leave a year by reference to their ordinary working hours. In other words, a “day” must be calculated by reference to an employee’s ordinary hours of work, and not the “working day construction” method that had been applied by the Federal Court.

For example: a part time employee working 20 hours per week  (40 hours per fortnight) would still accrue one day of personal leave each fortnight, BUT that “day” would have a value of 4 hours. This would equal 40 hours of personal leave per year = 4 hours x 10 days.

“The ruling will provide employers across Australia with a welcome relief, as there is no longer a need to adapt personal leave accruals in existing payroll systems,” Cecilia White, HR Consulting Director of Perks People Solutions mentions. “The status quo has returned.”

If you require any further clarity on your obligations as an employer regarding Personal Leave, please contact Cecilia White and the Perks People Solutions Team.

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