The Federal Court has published an important decision about sick leave entitlements that will affect all organisations that employ shift workers who do not work a standard 5 day, 9-5 pattern of work.
In the 57 page judgment the Court essentially just says “a day means a day”. However, for the purpose of calculating sick leave entitlements, this is significant. To summarise:
- Full time employees have a right under the National Employment Standards to 10 days of paid personal (sick/carers) leave per year.
- It is a common industrial practice to convert this entitlement into a number of hours, based on a maximum of a 38 hour working week, so that a day of leave is worth 7.6 hours and 10 days of personal leave is worth 76 hours.
- The court has said that this approach is incorrect, as it results in unfairness to shift workers. For example, it means that a person who ordinarily works shifts of 12 hours would use up nearly all of their 76 hours of annual sick leave after only taking 6 days of sick leave.
- The correct approach for employers is to treat an employee’s accrued sick leave balance in terms of days, rather than hours, with an employee accruing 1 day of personal leave for every 5.2 weeks worked. For each day of sick leave that an employee takes, they must be paid the amount that they would have earned had they attended work.
- The court specifically rejected the argument that an employer should be capable of knowing the monetary value of an employee’s sick leave entitlement at any point in time in advance of the leave being taken.
What you need to do
It is possible that this decision could be appealed to the High Court or changed by the introduction of legislation, but in the meantime organisations should:
- consider whether they need to change their systems for calculating sick leave entitlements;
- conduct an audit of leave accruals for all employees who do not work standard hours to work out any past underpayments or overpayments; and
- be alert to this issue when negotiating adjustments for employment entitlements in any merger or transfer of business.
 Mondelez v AMWU & Ors  FCAFC 138