Employers can breathe a sigh of relief: the High Court has clarified how personal leave accrues.

In August 2019 the Full Federal Court decided in Mondelez v AMWU[1] that all employees (part-time and full-time employees) accrue 10 days of personal leave each year, based on the number of hours they work each day, irrespective of the number of days worked each week.

This meant:

  • shift workers working three days of 12 hours per day, accrued 120 (12×10) hours of personal leave per year; and
  • part-time employees working two 7.5 hour days would accrue 75 (10×7.5) hours of personal leave each year.

This created confusion and an inequitable system, which arguably undermined the intention of parliament when setting out the entitlement to personal leave in the Fair Work Act 2009.

Mondelez appealed the decision and in August 2020, the High Court overturned the Full Federal Court decision. In summary, the High Court has ruled that an employee’s entitlement to personal leave is 1/26th of an employee’s ordinary hours of work in a year (not days of work).

Now the shift workers (mentioned above) will accrue 72 hours of personal leave each year and the part-time employees will accrue 30 hours of personal leave. The decision creates equity between part-time and full-time employees and provides employers with certainty how to calculate accrual and deductions of personal leave.

Employers should double check their payroll systems comply with their current obligations.

Please contact Simonne or Andrew if you would like some guidance on accrual of employee entitlements.

[1] Mondelez v AMWU & Ors [2019] FCAFC 138


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