Resources and energy industry employers strongly support a pending appeal to the High Court of Australia challenging an astonishing decision which overturned the longstanding practice for calculating personal leave and which would lead to significant inequities for different groups of employees.

AREEA supports the employer, Mondelez, in appeal the decision and equally congratulates the Australian Government’s Attorney General and Minister for Industrial Relatinos Christian Porter in taking decisive action on an issue affecting most Australian workplaces by joining the appeal of this significant and unfair decision. 

It followed the controversial Federal Court decision in Mondelez v AMWU which found the National Employment Standards required all employees to be provided with enough personal leave to allow them to take 10 days of personal/carer’s leave per year, irrespective of how many hours they work each day.

This decision overturned the widely accepted practice of taking “10 days” to mean 10 x 7.6 hour working days, or 76 hours in total, which would apply to all employees regardless of the shifts or rosters worked.

In effect, this decision would provide employees working long shifts and/or industry-specific rosters with far greater leave entitlements than those who work a standard 38-hour week.  This would have far-reaching implications for real-world employment practices across the broader economy.

By way of example, consider an employee working a roster of 4 x 12 hour working days, followed by four non-working days (4 days on, 4 days off).

• The longstanding accepted practice would be to provide this employee with 76 hours of personal/carers leave, calculated as 10 x 7.6 hour days. This would be the same entitlement provided to an employee working a standard 38 hour working week (5 days on, 2 days off).
• Under the Federal Court’s interpretation in Mondelez, the employee working the 4/4 roster would be provided with 120 hours of personal / carers leave (10 x 12 hour days). This would provide them with 158% of the entitlement afforded to the employee working the 5/2 roster, despite the total hours worked each year averaging out to be roughly the same.

“Australia Resources and Energy Group AREEA supports Mondelez and the Australian Government exercising their rights of appeal on a decision that is inconsistent with not only current and longstanding industry practice, but also Parliament’s intended purpose of the provisions and previous case law,” Steve Knott, Chief Executive of AREEA, said.

“The decision wildly deviates from current and widespread leave accrual practices, creating uncertainty, confusion and concern for employers and employees. The astonishing interpretation of two of the three Judges in this case would impact many employers across almost every industry.

“Not only does the decision create avoidable uncertainty for both employers and employees, it will expose businesses to an unprecedented level of financial risk.”

The strong dissenting judgement by Justice O’Callaghan in favour of the employer’s position found the “position advanced by the union produces an outcome that creates inequities between different classes of employees that Parliament did not intend”.

“This decision is grossly unfair to employees working a standard 38-hour week. The inequities it creates will be damaging to workplace culture and harmony – clearly this is not what Parliament intended when drafting the Act.”

Government seeks to restore clarity to personal leave entitlements

The Australia Government confirmed within an hour of the employer’s announcement that it too would seek leave in the High Court to appeal the decision. The Government said the decision had sparked confusion and uncertainty around the way sick and carers leave entitlements should be calculated.

Mr Porter said the decision needed to be appealed because it had created significant inequities between employees, while also exposing employers to cost increases that they estimate could reach up to $2 billion per year.

“Labor was repeatedly warned by business and industry groups when it drafted the Fair Work Act that the change to its definition might one day be interpreted this way,” Mr Porter said.

“But Labor reassured them that the status quo would be maintained, along with the fair and equitable situation that ensured employees who worked the same total number of hours each week would get the same amount of accrued leave.

“The Government believes that Australian employers and, potentially, Australian taxpayers should not be forced to foot the bill for Labor’s mistake, which is why it is necessary to seek to clarify the situation by mounting an appeal.”

In deciding whether to seek leave to appeal the decision, the Government noted the dissenting opinion of Justice O’Callaghan who agreed with Mondelez that the traditional method of calculating leave should continue to apply as the inequities created were not intended by Parliament. Mondelez has announced it intends to lodge its own appeal.

If you would like to discuss your organisation’s specific circumstances, please get in touch with Leyla Sandeman [email protected], Ben O’Brien [email protected] or your AREEA consultant.