Changes to Paid sick and carers leave in Australia

https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/recent-federal-court-decision-accrual-of-personal/carer-s-leave

https://www.fairwork.gov.au/leave/sick-and-carers-leave/paid-sick-and-carers-leave

At this stage Infinet will not be making any changes to our software. 

Once Fairwork  have updated their website with their guidance we will then review and determine any changes we will make. Of course we can't make those changes instantly so it will need to be reviewed by our development team and an appropriate timeline scheduled for the release. 

In the meantime if you are unsure what to do then you should consult your own legal advice. As an employer it is your obligation to comply with the law. 

Here is what the Australian Payroll Association have to say on the matter.   https://www.austpayroll.com.au/

You may/may not be aware of a significant decision made by the Federal Court last week in relation to sick/personal leave entitlements under the Fair Work Act 2009.

The entitlement to sick/personal leave under the Fair Work Act 2009 is 10 days per year. As such, the common approach when it came to accruing personal leave entitlements was to accrue 76 hours per year (based on the presumption that 76 hours equates to 10 days).

In the case of Mondelez v AMWU, the Federal Court decided that 10 days = 10 days. Not 76 hours but 10 DAYS. This has a couple of flow-on effects for employers (and no doubt some serious headaches when trying to configure your software accordingly). The 2 key amendments for employers will be:

1. For employees who work ordinary hours > 7.6 per day, they will have more "hours" to accrue. For example, Maria works 4 x 9.5 hour days each week (=38 hours per week) and Amy works 5 x 7.6 hours per day (= 38 hours per week). Both Maria and Amy accrue 10 DAYS of sick/personal leave each year and if this is converted to hours, – as most if not all payroll software accrues the entitlements in hours like annual leave – Maria accrues 95 hours per year and Amy accrues 76 hours per year. This gets even trickier if Maria worked 3 x 10 hour days and 1 x 8 hour day – if Maria takes a 10 hour day as personal leave, this is 1 DAY. If Maria takes the 8 hours day as personal leave, this too is 1 DAY. However, each day has a different amount of hours.

2. Part-time employees are also entitled to 10 days per year. So an employee working 3 x 8 hour days per week (24 hours) is also entitled to 10 days per year.

There may/may not be a flow-on effect from this decision where employers may be liable for backpays (for example where a 12 hour per day shift worker was only paid 7.6 ordinary hours or only accrued 76 hours per year or where a PT employee has accrued 10 days per year pro-rata). There has been no determination regarding this matter. Furthermore, Mondelez are appealing the decision so there may be another outcome in the future however as this case took over 18 months to decide, it may take just as long to hear the appeal so please don’t wait for the appeal!

Whilst I have a lot more to say about this case and how much of a nightmare it is for payroll personnel, I will leave you all to contemplate how you are going to configure your software and pay sick/personal leave entitlements based on the decision last Thursday – enjoy!

Kind Regards, 

Maria Nikoletatos
Chief Knowledge Officer

Here is what TAPS have to say on the matter. https://www.payroll.com.au/

Last week you may have read about an important court ruling on sick leave.

The case, (Mondelez Australia Pty Ltd v AMWU & others), concerned two shift workers at the Cadbury chocolate factory in Tasmania. Here is a quick summary.

• The National Employment Standards (NES) provide for 10 days paid personal leave per year.
• The media is reporting the employer believed that workers should receive 76 hours of personal leave under the NES, based on 10 days of 7.6 hours work each.
• Cadbury employees work ordinary hours of 12-hour days, so they argued they should have access to 120 hours of paid personal leave per year to cover ten work days.
• The Federal Court ruled in favour of the workers.

What does this mean for payroll?

Although the legislation has not changed, this ruling does provide a new interpretation of the rules.

Given this ruling is so new, it will take time for Fair Work to factor this into the guidance they provide.

This is clearly a significant case, which has prompted Fair Work to provide the following caution on their website:

So for now, we need to wait for further advice from Fair Work.

There are two other important considerations we need to keep in mind:

• The employees were covered by an Enterprise Agreement
• Mondelez (the employer) is understood to be considering the judgment before determining its next steps, which may include an appeal.

As you can imagine, the media coverage has over-simplified the facts of the case. The final ruling is actually 129 pages long and contains a detailed analysis of the situation.

It is important to note that this case only relates to personal leave, but it may have implications for the accrual and payment of annual leave.

A word of warning

TAPS had many members contact us last week after another organisation provided some interesting comments on the case.

In particular, this article stated that… all employees, including part-time employees, are entitled to 10 days of personal leave, regardless of how many hours or days they work.

Given this case did not relate to part-time employees, it seems ridiculous to make the conclusion that a part-time employee who works 1 day per week, would be entitled to 10 days of personal leave.

Fair Work have always been very clear that part-time employees receive a pro-rata entitlement to personal leave.

It is also surprising that this organisation can speak with such authority, when even Fair Work is yet to comment.

As we mentioned earlier, we need to wait for Fair Work to digest the outcome of this case. Stay tuned for more information.