107 – Michael’s Corner

James Murphy

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Michael’s Corner

Article 007


This article discusses an important change to sick leave following a high court appeal decision, also we want to remind you all what has not changed during COVID-19 and the Fair Work Commission stance when the Fair Work Act 2009 is not followed.

The High Court Appeal of:

Mondelez Australia Pty Ltd and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union Known as The Australian Manufacturing Workers Union (AMWU) & Ors [2020] HCA29.

This landmark decision was handed down 13 August 2020 in which the following three High Court judges, Chief Justice Susan Kiefel, Justice Geoffrey Nettle and Justice Michelle Gordon disagreed with the Unions view on sick leave that took into account the history of sick leave.

The High Court’s decision overturns a controversial decision made by the Full Federal Court in August 2019.

The Mondelez Decision in 2019, where shift workers working 3 x12 hour shifts were awarded 120 hours of personal and carers leave per year and their colleagues who were working 38 hours per week on a 7.6h basis were left with 76 hours personal and carers leave per year, shocked all industry. Businesses were facing unknown leave balances and uncertainty on how to account for part time employees’ entitlements, particularly when hours are varied regularly.

The ‘working day’ construction adopted by the majority in the Full Court (and urged by the union parties in this Court) is not consistent with the purpose of s96, to protect employees against loss of earnings or the stated objectives of the Fair Work Act of fairness, flexibility, certainty and stability,” said Chief Justice Kiefel and Justices Nettle and Gordon in handing down the Decision.

Some keys points from the decision

The “working day” construction would lead to inequalities between employees with different work patterns, and so would be unfair. An employee whose hours are 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.

“The expression ’10 days’ in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer’s leave accruing for every year of service 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. A ‘day’ for the purposes of s 96(1) refers to a ‘notional day’, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period.”

What does this mean for my business?

Full-time employees working a 38-hour week will accrue 76 hours of sick leave which is 10 days. Each day a person takes off sick means they are paid 7.6 hours for the day regardless of what they are rostered.

Part-Time employees working less than 38 hours per week will still be entitled to 10 days sick leave but based on their average hours. E.g. A Part-time employee works 25 hours a week their sick leave would be 50 hours per year. As per the above part-time example each day a person takes off sick means they are paid 5 hours for the day regardless of what they are rostered.

The Decision allays confusion and frustration from businesses who struggled to understand how such a ruling could be considered fair or be implemented in practice and affirms the widely held construction that 10 days paid personal leave is equivalent to 2 ordinary weeks work/pay/hours.

These changes should make payroll much easier.

Do not forget your obligations still exist under COVID especially when it comes to consultation and failure to do so can be costly to a business.


Matthew Browne v MySharedServices Pty Ltd [2020] FWC 4445 (26 August 2020)

The Fair Work Commission ruled that an employer’s failure to consult and consider ways to avoid retrenchment rendered the redundancy non-genuine.

Commissioner Bisset accepted that the role performed by the consultant was no longer required due to changes in the company’s operational needs and therefore met the requirements of the Fair Work Act’s s389(1)(a).

As the company did not comply with the obligations or follow all the requirements of the consultation clause under the Clerks Award, where the employer is required to consider any matters raised by employees in relation to the change, it meant the redundancy was not genuine as per the Act.

The following information is from the decision of Commissioner Bisset

She said the company “to engage in any discussion” with the employee and the other two workers it dismissed at the same time.

The consultation omission “is telling” as “there may well have been opportunities for [the employee] to be redeployed”.

The commissioner said that it “cannot be known what might have come out of a proper consultation process with all of the staff affected by the change”.

“It may be that staff would have proposed a reduction in hours or some other steps that may have kept the employee in employment.

“It cannot be known what proposals may have put forward as a means of securing his employment.

“He may, for example, have offered to take leave with or without pay until the situation was better understood, or until it was known how JobKeeper, having been announced on 30 March 2020, would operate and if the company would be eligible for it.

“As it was, none of this occurred.”

Commissioner Bissett accepted that when the company dismissed the consultant “the nature of the operation of JobKeeper was not known”, as it had only been announced the previous week.

“However, [the employee] is right, the purpose of JobKeeper was to ensure employees and their employer maintained a relationship, to minimise job loss and minimise redundancies.

“Whilst the company may not have understood its operation on 8 April 2020 neither did many other employers who managed to maintain employees until such time as the JobKeeper payments came through.”

She accepted that the dismissal was not genuine and said she would order compensation after the parties provide further submissions.

Copy of complete decision:       http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FWC//2020/4445.html

Please note that this is general advice for information only and any application of legislation and/or Industrial Relations or contractual requirements may require professional advice to suit your individual circumstances. If you have a question for Michael’s team send us an email [email protected] or sign-up for a Buzz Session…