High Court Decides Historic Personal Leave Case by Clarifying the Accrual Procedure

In a defining industrial law matter, the High Court of Australia has quashed arguments that personal leave is calculated based upon the number of hours a worker does per day when accruing leave under the National Employment Standard & Fair Work Act 2009.

The determination by the High Court is a significant and positive decision for businesses in Australia, with estimates that the earlier Federal Court decision could have added at least $2 billion to employer’s wages bills across Australia.  The High Court’s determination in this matter can be seen as a practicable and sensible approach to the construction and interpretation of the Fair Work Act and a good outcome for employers in Australia. 

A year ago, two Cadbury workers won a Federal Court case arguing that because they worked 12-hour shifts, their 10 days of personal leave should be paid at 12 hours a day.

The company had argued it was entitled to pay the rate at only 7.6 hours.

By a majority the High Court overturned the Federal Court finding and ruled the entitlement centred around two traditional weeks (10 days at 7.6hrs) and since the Cadbury workers worked only three long shifts a week, they were only entitled to six days of paid personal and carer’s leave.

The High Court declared that the amount of paid personal/carer’s leave accrued for every year of service is equivalent to an employee’s ordinary hours of work in a week over a two (2) week (fortnightly) period, or 1/26 of the employee’s ordinary hours of work in a year.

The workers argued that a reference to 10 days entitles every employee, regardless of their pattern of work or distribution of hours, to be absent without loss of pay on 10 working days per year. The High Court said that this would give rise to “absurd results and inequitable outcomes” and it would be contrary to the legislative purpose. 

If you have any questions as to how this determination may affect your business, Roberts Legal is available to provide legal advice in relation to leave related issues and interpretation of leave related legislation and agreements.

By Jeremy Kennedy,
Special Counsel