Personal / Carer’s Leave

14 January 2020

In mid-2019, significant changes were made to the way Personal/Carer’s Leave is accrued for employees who work non-standard hours.

Entitlements to Personal / Carer’s Leave (or Paid Sick and Carer’s Leave) have changed for employees who do not work a standard 7.6 hours per day. This is the outcome of a significant decision handed down in the Full Federal Court of Australia on 21 August 2019. The Mondelez decision determined that, under the Fair Work Act, eligible employees are entitled to 10 working days of personal/carer’s leave for each year of service, regardless of the number of ordinary hours the employee would work on those days. This includes part-time employees, and leave is calculated on the number of working days, not the number of hours worked.

An appeal against this decision has been lodged by the Australian Government and Australian industry in the High Court of Australia. This is yet to be heard. In the interim, the ACA advises members that the decision on 21 August is the current state of the law and they should familiarise themselves with this decision and what it means for their practice.

What does it mean?

This decision is relevant to all architectural practices that engage staff to work hours other than the standard 38-hour week. It affects those who work part-time and those who work above standard hours per day. Note that the Fair Work Act 2009 allows for claims from employees to be retrospective for six years.

Part-time employees are now entitled to 10 days per year. That is, employees who work less than the standard 38 hours, will still accrue 10 days, although with fewer hours. For example, an employee working 4 x 8-hour days per week (32 hours) is entitled to 10 days per year, which would equate to 80 hours.

Employees who work ordinary hours greater than 7.6 hours per day will accrue more hours than the standard 76 hours, albeit over 10 days.

The following example outlines the changes and how they can affect the payroll:

John works 4 x 9.5 hours per day each week (38 hours per week) and Felicity works 5 x 7.6 hours per day (38 hours per week). Both John and Felicity accrue 10 days of personal leave each year. As John’s standard day is 9.5 hours, he now accrues 95 hours per year and as Felicity works 7.6 hours per day she accrues 76 hours per year.

What you need to do?

First, ensure that your practice’s leave accrual and payroll practices (and your payroll software) can accommodate non-standard hours of work and subsequent accrual of personal leave.

Second, commence an audit of personal leave accrual as soon as possible. If the decision is not reversed by the High Court or by legislative change, employers will need to undertake a reconciliation of personal leave accruals for at least the past six years. Be aware that this could highlight significant under and over accrual issues (and associated under and overpayments) for employees working non-standard hours of work.

The ACA will keep members informed about the High Court appeal and any relevant legislative change. At this stage, the effect of this decision on other forms of leave, including annual leave, is unclear.

For more information on the changes, see the Fair Work Ombudsman’s Paid Sick and Carer’s Leave information page or the Paid Sick and Carer’s Leave Frequently Asked Questions page.