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High Court overturns Federal Court decision on personal leave

Tuesday September 1, 2020

High Court overturns Federal Court decision on personal leave

Last year, the Full Court of the Federal Court of Australia handed down a landmark judgment in the case of Mondelez v AMWU confirming that all full-time and part-time employees were entitled to 10 days of personal leave per year, in accordance with its interpretation of section 96(1) of the Fair Work Act 2009 (Cth) (the Act).


This judgment had the effect that no matter what hours an employee worked, they would be entitled to ten days of leave.


This meant that:

  • A full-time employee who works five 7.6 hour days a week would be entitled to ten 7.6 hour days of paid personal leave (that is, 76 hours of personal leave);
  • A part-time employee who works two 5-hour shifts a week would be entitled to ten 5-hour days of paid personal leave (that is, 50 hours of personal leave);
  • An employee who works three 12-hour shifts a week would be entitled to ten 12-hour days of paid personal leave (that is, 120 hours of personal leave).

This judgment took many employers and industry groups by surprise, who had understood the relevant provision of the Fair Work Act to entitle employees to personal leave on a pro-rata basis – that is, that their entitlement to personal leave depended on the hours they worked. This was especially the case, as in accordance with the above example, it would mean that an employee working 36 hours over three 12-hour shifts a week would be entitled to 44 more hours of personal leave a year than an employee working 38 hours over five 7.6 hour shifts.

Like many employers, Mondelez was not satisfied with this decision of the Federal Court, and appealed the decision, with the support of the Australian Government, to the High Court of Australia.

Reversal of decision

In what is a welcome outcome for employers, the High Court delivered its judgment, reversing the decision of the Federal Court and confirming once and for all that personal leave accrues on a pro-rata basis – that is, the accrual of personal leave is dependent on the number of hours worked by an employee.

The High Court has confirmed that the meaning of '10 days' of personal leave as expressed in section 96(1) of the Act means an amount of paid personal leave accruing for every year of service equivalent to an employee's ordinary hours of work over a fortnightly period, or 1/26 of an employee's ordinary hours of work in a year. The Court held that a 'day' for the purposes of section 96(1) of the Act refers to a 'notional day' which consists of one-tenth of the equivalent of an employee's ordinary hours of work in a fortnightly period.

Using the examples as set out above, this means that:

  • A full-time employee who works five 7.6 hour days a week would be entitled to the equivalent of ten 7.6 hour days of paid personal leave (that is, 76 hours of personal leave);
  • A part-time employee who works two 5-hour shifts a week would be entitled to the equivalent of ten 2-hour days of paid personal leave (that is, 20 hours of personal leave);
  • An employee who works three 12-hour shifts a week would be entitled to the equivalent of ten 7.2-hour days of paid personal leave (that is, 72 hours of personal leave).

The High Court's decision now provides certainty for employers and employees with respect to personal leave entitlements. If you have any queries about your obligations, please do not hesitate to contact our firm.