The High Court Decision on Personal Leave: What Employers Need to Know

The High Court has reversed a Federal Court ruling on how personal and carer’s leave is calculated for permanent employees covered by the Fair Work Act.

The 2019 ruling against Cadbury manufacturer Mondelez originally found the Fair Work Act’s minimum 10 days’ paid personal leave should be given to permanent employees regardless of the number of days worked per week or number of hours per day.

Employsure, Australia’s largest workplace relations advisor, and other employer groups, argued that this would have created unnecessary confusion among business owners over the amount of leave permanent workers were entitled to.

Essentially, it meant workers who completed the same hours as others on different shifts, would be entitled to different leave amounts.

What the Reversal Means

The reversal by the High Court means the rate of personal and carer’s leave will revert back to the way it used to be calculated prior to August last year.

Permanent full-time employees are entitled to 10 days personal leave per annum, while permanent part-time employees are entitled to a pro rata amount based on the number of ordinary hours worked in a two-week period.

The payment will be paid based on ordinary hours normally worked had the employee not taken the leave.

When an employee takes personal/carer’s leave the number of hours taken as leave are subtracted from an employee’s total balance.

If personal and carer’s leave for your permanent employees was changed as a result of last year’s decision, employers need to recalculate lave balance and revert back to the way it was previously calculated:

• Full-time employees – 10 paid days per year (76 hours per year), paid based on the ordinary hours the employee would have worked had they not taken the leave
• Part-time employees – pro rata based on their ordinary hours worked, paid based on the ordinary hours the employee would have worked had they not taken the leave

When an employee takes personal leave from now on, employers must pay them for their ordinary hours they would have worked.

Explaining to Staff

Employers are advised to communicate with their staff on the outcome of the High Court’s decision, to avoid any potential confusion.

If an employer changed how personal leave operates following the original Federal Court ruling last August, they need to update their payroll system accordingly. Staff need to be assured that they do not need to do a thing, and that when personal or carer’s leave is taken, the business will comply with the Governing legislation.

If an employer did not change how personal leave operates as a result of last August’s decision, the employer should still reiterate with staff that the way they operate personal or carer’s leave in the business is accurate, and no further action is needed.