How should you calculate sick leave?

In a recent case Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 (Mondelez Case) the High Court settled some long-standing uncertainty about the meaning of “a day” under the Fair Work Act 2009 (Cth) (Fair Work Act).

The National Employment Standards (NES), through the operation of section 96(1) of the Fair Work Act, gives all employees 10 days paid personal/carers leave per year. In this case the employees were 12 hour shift workers, and argued that the should be paid for 12 hours when they take 1 day of personal/carers leave. The employer’s position was to pay 7.6 hours for the day of personal leave, the same as other employees under the NES.

How many hours should be calculated in a “day” was not clearly defined prior to the Mondelez Case.

What did the High Court find?

In this case, the High Court confirmed that “10 days” in this context means 10 “notional days”. A “notional day” is defined as 1/10 of the employees hours of work in a 2 week period. Or, to account for patterns of work that don’t follow a two-week cycle, the entitlement can also be calculated as 1/26 of an employee’s ordinary hours of work in a year.

In making this finding, the High Court rejected the assertion made by the employee that a “day” means a 24 hour period. The High Court was clear that the personal/carers leave entitlement does not necessarily mean employees are entitled to be absent from work for 10 days per year without any loss of pay, stating that this construction would give rise to “absurd results and inequitable outcomes”.

To demonstrate this, the High Court provided the example that an employee working 36 hours per week, over three 12 hour days would be entitled to 10 12-hour days of paid personal/carers leave or 120 hours per year, but an employee working 36 hours per week over five 7.2 hour days would only be entitled to 72 hours of paid personal/carers leave per year.

What does this mean for employers?

In practice, this means that the amount of personal/carers leave accrued by an employee each year should be calculated as equivalent to 1/26 of the employees ordinary hours of work for the year.

When claimed by an employee, each “day” of personal/carers leave paid to the employee will be the amount of 1/10 of that employee’s ordinary hours of work for a fortnight, then deducted from their leave balance.

These calculations can be confusing, but by way of example:

  1. An employee works fulltime 7.6 hours each day:
    • total ordinary hours in a year = 1,976 (38 hours x 52 weeks)
    • personal/carer’s leave = 76 hours per year (1,976 divided by 26)
    • ordinary hours in fortnight = 76
    • 1 day of personal carer’s leave = 7.6 hours paid and deducted from leave balance (76 divided by 10)
  1. An employee works 3 shifts of twelve hours per week
    • total ordinary hours in a year = 1,872 (36 hours x 52 weeks)
    • personal/carer’s leave = 72 hours per year (1,872 divided by 26)
    • ordinary hours in fortnight = 72
    • 1 day of personal carer’s leave = 7.2 hours paid and deducted from leave balance (72 divided by 10)
  1. A part-time employee works 15 hours per week
    • total ordinary hours in a year = 780 (15 hours x 52 weeks)
    • personal/carer’s leave = 30 hours per year (780 divided by 26)
    • ordinary hours in fortnight = 30
    • 1 day of personal carer’s leave = 3 hours paid and deducted from leave balance (30 divided by 10)

The personal/carers leave entitlement provided by the NES is a minimum entitlement for all employees. As an employer, you should be careful to understand how this entitlement accrues, is paid and deducted from employees. As demonstrated by this recent High Court Case, this is not necessarily a straight forward calculation.

If you want to find out more about your obligations in relation to employees personal/carers leave entitlements, contact us here.

Share this post with your friends

Share on facebook
Share on twitter
Share on linkedin

Related Posts