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2020 may see a fundamental shift in how personal leave is accrued and paid following a controversial Federal Court decision relating to the calculation of leave for employees with non-standard rostered hours.

In the case of Mondelez v AWMU:

  • relevant employees were covered by an enterprise agreement
  • the enterprise agreement permitted employees to work ordinary hours of 36 per week (by way of 3 x 12 hour shifts per week) and entitled those employees to 96 hours of paid personal leave per year of service
  • when they took paid personal leave though, the employer deducted 12 hours from their accrued balance, meaning they only accrued enough leave over a year of service to cover 8 days absence
  • a claim was made that this contravened the National Employment Standards (found within the Fair Work Act) as it failed to provide such employees with 10 days of paid personal leave per year of service
  • the majority of the full Federal Court agreed, however, Mondelez has since appealed to the High Court

Unless the High Court overturns this decision or parliament makes legislative change, thousands of national system employers who operate with longer/non-standard shift arrangements will likely become exposed to substantial additional personal leave liabilities, back-pay claims, and potential penalties.

Action Items:

For now, businesses who may be affected by the Federal Court decision such as those in the manufacturing, healthcare, mining and construction sectors, should review their payroll systems and leave records carefully and prepare for a potential change/increase to employee leave accruals. If you require any assistance or advice, please contact our Employment & Workplace Law Team.