High Court overturns Mondelez ruling – a victory for employers

19 August 2020

The High Court of Australia has reversed an earlier decision of the Full Court of the Federal Court and clarified how personal/carer’s leave is to be accrued and taken. Our previous summary of the Full Federal Court’s decision is available here.


On 13 August 2020, the High Court handed down its decision in Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) [2020] HCA 29.


What was the case about

The case involved a dispute between Mondelez (the owner of Cadbury) and two of its employees who worked 36 hours per week over three shifts of 12 hours.


The issue to be determined was how much personal/carer’s leave the employees were entitled to given their particular patterns of work. 


The entitlement to paid personal/carer’s leave comes from section 96(1) of the Fair Work Act 2009 (Cth), which provides that “for each year of service with [an] employer, an employee is entitled to 10 days of paid personal/carer’s leave”.


The AMWU, representing the two employees, argued that one “day” meant a 24 hour period, and as such the employees were entitled to 10 separate 24 hour periods of personal leave.  Having regard to their pattern of work, the employees’ entitlement to personal/carer’s leave was therefore 10 days multiplied by 12 hours per day, being a total of 120 hours.


The employer, Mondelez, supported by the Morrison Government who intervened in the proceedings, argued that one “day” is to be interpreted as one “notional day” of 7.6 ordinary hours (for an employee working a 38 hour week).  The two employees were therefore entitled to 10 days multiplied by 7.2 hours per day, being a total of 72 hours of personal/carer’s leave.


The High Court’s decision

The majority of the High Court ultimately found that the entitlement to “10 days” of personal/carer’s leave under the Fair Work Act is to be calculated based on an employee’s ordinary hours of work averaged over a two week period.  In this way, one “day” is one “notional day” consisting of one tenth of the equivalent of an employee’s ordinary hours of work in a two week period.  Because patterns of work do not always follow two-week cycles, the entitlement to “10 days” of paid personal/carer’s leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year.


The High Court considered it would be inequitable if an employee whose hours of work were spread over fewer days with longer shifts would be entitled to more paid personal/carer’s leave than an employee working the same number of hours per week spread over more days.


Practically speaking, the outcome means that all employees working the same number of ordinary hours accrue paid personal/carer’s leave at the same rate, regardless of the shift length or patterns of work in which those ordinary hours are worked.


The implications of the decision

The High Court’s decision provides welcome relief for businesses when calculating their employees’ leave entitlements.  The outcome is consistent with the widely accepted method of accruing and deducting personal leave, and is particularly significant for businesses that engage workers to work shifts of different lengths.


This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice


Paul Dugan, Principal in our Disputes Team

Email: pdugan@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2266


Kylie Dunn, Senior Associate in our Disputes Team

Email: kdunn@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2286