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Employers breathe a sigh of relief as the High Court overturns the Mondelez leave decision

13 August 2020
Following the High Court’s decision this morning, the collective sigh of relieved employers can be heard across the country, as the High Court has overturned the decision of the Full Court of the Federal Court of Australia with respect to the accrual of paid personal leave entitlements.

In August 2019 the Full Court sent shock waves around Australia when it interpreted the long-standing entitlement to 10 days’ paid personal leave, as 10 working days. This had significant ramifications for employers, particularly those who employ shift workers.  

The facts

The Mondelez decision involved:
  • Shift workers who were employed to work 3 x 12 hour shifts per week (a total of 36 ordinary hours per week);
  • According to the usual custom, the shift workers’ personal leave accrued at the rate of 10 notional days; and
  • 10 notional days consisted of an employee’s average daily ordinary hours based on an assumed five-day working week. For example, an employee who works 36 ordinary hours per week works an average of 7.2 hours per day over an assumed five-day working week, with an overall accrual of 72 hours’ paid personal leave per year. 

The Full Court found that the entitlement to 10 days’ paid personal leave was based on a ‘working day’ and therefore, with respect to the affected shift workers, their accrual should be 12 hours per day (as opposed to 7.2 hours). This resulted in shift workers receiving substantially greater paid personal leave entitlements than non-shift workers. 

The High Court challenge

Mondelez, backed by the Federal Minister for Jobs and Industrial Relations, sought leave to appeal to the High Court of Australia.  The High Court today handed down its decision and overturned the Full Court’s decision. 

The High Court found that the entitlement to 10 days’ paid personal leave is a 'notional day' and not a ‘working day’. A notional day consists of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period. 

What does this mean?

This decision means the status quo has been maintained. A 'day' for the purposes of paid personal leave entitlements refers to a 'notional day' which means paid personal/carer's leave accrues (for every year of service) at the rate equivalent to:

  • an employee's ordinary hours of work in a week over a two-week (fortnightly) period; or
  • 1/26 of the employee's ordinary hours of work in a year.

If you are unsure what this may mean for your workforce, please contact Michelle Dawson or a member of our Employment and Safety team.

We would like to acknowledge the contributions of Nicole Davis to this article.

Further Reading