In brief 2 min read
The High Court of Australia has found that the Fair Work Act 2009 (Cth) (FW Act) entitlement to 10 days' paid personal/carer's leave accrues in hours (not days) based on employees' ordinary hours of work.
The High Court rejected the approach taken by the Full Court of the Federal Court of Australia that, regardless of the employee's pattern of work or distribution of hours, they are entitled to be absent on paid personal/carer's leave for 10 days per year.
What does this mean for employers?
It would be prudent for all employers to review their payroll rules to ensure paid personal/carer's leave is being correctly accrued, paid and deducted. This is particularly important for employers that changed the way personal/carer's leave is being accrued, paid and deducted following the Full Court of the Federal Court's decision. They will need to review their practices to ensure they align to the approach determined by the High Court.
What is the entitlement to paid personal/carer's leave?
For employees who work the same number of ordinary hours over a two-week period, their entitlement is to progressively accrue a number of hours of paid personal/carer's leave each year that is equivalent to those ordinary hours. For example:
- An employee always works 38 ordinary hours per week. The employee is entitled to 76 hours of paid personal/carer's leave per year.
- An employee always works 16 ordinary hours per week. The employee is entitled to 32 hours of paid personal/carer's leave per year.
For employees who do not work the same number of ordinary hours in each two-week period, the entitlement should be calculated by dividing the ordinary hours they are rostered to work for the year by 26. For example:
- An employee works a '14 on, 7 off' roster, with 8 ordinary hours per shift. The employee's annual paid personal/carer's leave entitlement is 112 hours multiplied by the number of cycles per year (17.38), which is then divided by 26 (ie (112 x 17.38) / 26 = 74.86 hours of paid personal/carer's leave per year).
- An employee works variable shift lengths on rotating rosters (such as a '4 on 4 off' or '7 on 7 off' roster). The employee's annual paid personal/carer's leave entitlement is the total number of rostered hours (excluding overtime) worked over the year, divided by 26.
When an employee takes paid personal/carer's leave, they should be paid for the ordinary hours they would have worked on that day and their accrual should be reduced by those same number of hours. For example:
- An employee works 3 shifts of 12 ordinary hours each week. If they take a day of personal/carer's leave they should be paid for 12 hours and their accrual should be reduced by 12 hours.
- An employee works 2 shifts of 8 ordinary hours and 2 shifts of 10 ordinary hours each week. If the employee takes a day of paid personal/carer's leave when they are rostered to work 8 ordinary hours, they should be paid for the 8 hours and their accrual should be reduced by 8 hours.