Michael’s Corner
Article 001
Hi all, welcome to Michael’s corner and firstly, it is a fantastic opportunity to be able to take over Leigh’s role in writing articles for this fantastic publication. Unfortunately, my first piece is not a good news story if you have people working non-standard days. Moving forward we will bring articles of use to the business as well as articles of legislative changes no matter what they are. Once again, I would like to thank Leigh and the awesome team at bO2 Corporate Essentials.
SICK LEAVE FOR EMPLOYEES WHO DO NOT WORK A STANDARD 7.6-HOUR DAY
A significant decision with regard to sick leave was handed down in the Federal Court on the 21st August 2019.
The decision is known as Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) [2019] FCAFC 138.
The decision has determined that the National Employment Standards (NES) provide employees with access to 10 working days personal/carer’s leave for each year of service, regardless of the number of ordinary hours the employee would ordinarily work on those days.
This is certainly a change from the introduction to National Minimum standards (including for personal/carer’s leave) when first implemented in 2006.
From 2006 to 2009 personal/ carer’s leave was talked about in hours and that was at 76 hours for a full-time employee, which equates to 10 days at the normal 7.6-hour day.
The biggest issue that arises are employers’ current leave accrual and payroll practices, does your payroll software work with non-standard rosters or hours of work?
The effects on other forms or leave, including annual leave is unclear as the court did not deal with this issue.
Following is an example of the changes and how it can affect your payroll:
For employees who work ordinary hours greater than 7.6 per day, they will have accrue more hours.
John works 4 x 9.5-hour days each week (=38 hours per week) and Felicity works 5 x 7.6 hours per day (= 38 hours per week).
Both John and Felicity accrue 10 DAYS of sick/personal leave each year and if this is converted to hours, as most if not all payroll software accrues the entitlements in hours like annual leave.
Now with the above decision John accrues 95 hours per year and Felicity accrues 76 hours per year.
What happens if Mary worked 4 x 8-hour days and 1 x 6-hour day?
Mary takes an 8-hour day as personal leave; this is 1 Day. If Mary takes the 6-hour day as personal leave, this too is 1 Day. However, each day has a different number of hours.
If Mary was to take 10 days sick leave per year on her 8-hour days she would get 80 hours but is her took them on her 6-hour days she would get 60 hours.
Part-time employees are also entitled to 10 days per year. So, an employee working 4 x 8-hour days per week (32 hours) is also entitled to 10 days per year. This equates to 80 hours of sick leave.
What you need to do:
If the decision is not reversed by the High Court or by legislative change, many employers will need whom are affected by the decision will need to undertake a major reconciliation of personal carer’s leave accruals for at least the past six years. The Fair Work Act 2009 allows for claims for employees to go back six years.
The result could highlight significant under and over accrual issues (and associated under and overpayments) for employees working non-standard hours of work
Given the uncertainty associated with any High Court appeal and/or Parliamentary processes, it is recommended that your business commence and audit.
This case was initiated by the employer, Mondelez as some employees work 7.2 hours per day, five days per week. Others work three 12-hour shifts per week.
The Union contended that the NES entitlement instead covered absences on 10 calendar days for each year of service.
The majority’s decision
A majority of the Full Federal Court (Bromberg and Rangiah JJ) decided that the NES provides employees with access to 10 working days personal/carer’s leave for each year of service.
In a brief dissenting judgment, O’Callaghan J accepted the Minister’s interpretation, citing the text of the Fair Work Act, the Explanatory Memorandum and the practical implications of any alternative interpretation.
The following is a link to the decision: https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2019/2019fcafc0138
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 question for Michael’s team send us an email [email protected]