In the midst of the craziest year most of us have ever lived through, we finally see a sliver of light with a common sense decision coming out of the High Court. Court decisions don’t always make for very exciting reading but we think this one is definitely worth highlighting given the implications of the original ruling for businesses.
To bring you up to speed, in September 2019 the Full Federal Court heard a case regarding Mondelz employees. Under flexible working arrangements, two Mondelz employees were rostered to work 36 hours per week which was averaged over a four week cycle. This mean that they regularly worked 12 hour shifts across three days only instead of working shorter shifts across a regular five day week.
The question before the Court was whether these employees were entitled to:
The original Federal Court’s application of the Fair Work Act meant that they determined the Mondelz employees were entitled to ten days of personal leave meaning 120 hours per year based on their regular 12 hour shifts. But had they worked a regular 7.6 hours per day across 5 days, they would have only had access to 76 hours of personal leave per year. Basically, they were saying that leave accrued in days, not hours and yes, that was as messy as it sounds! And the ramifications were huge because it also determined that within this interpretation, part time employees were able to access 10 days of personal leave per year, regardless of the number of days they worked, as opposed to calculating entitlements on a pro rata basis.
WHAT?? Applying this decision could have meant that if you had a part time employee working one day a week, they would still be able to access 10 paid personal leave days per year. This is not a viable financial position for any employer, nor is it sensible or equitable.
Common Sense Prevails
Fortunately, Mondelz appealed this decision to the High Court who have just declared that the Full Federal Court decision would “give rise to absurd results and inequitable outcomes, and would be contrary to the legislative purposes of fairness and flexibility in the Fair Work Act”.
The High Court in a majority judgment declared to this effect:
In every day English, this means that personal leave is accrued on the basis of an employee’s ordinary hours of work in a year and this applies to both full or part time employees bringing fairness back into the conversation around personal leave while keeping flexible working arrangements an affordable option for employers to consider. Phew! The team here at HRSS has been waiting with bated breath for the High Court decision and we are very relieved that common sense prevailed!
Given the uncertainty around this area over the past twelve months, chat with the HR Staff n’ Stuff team if you have any questions at all on this, or any other HR related matter.
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