To our valued colleagues, clients and communities,
Last week the High Court handed down a decision clarifying how paid personal leave is accrued and taken. This determination overrules an earlier contentious decision by the Full Federal Court which had ruled that all employees were entitled to 10 days paid personal leave (10 x 24 hour periods off work each year) each year – regardless of their actual working hours.
What did they decide? The determination
Under the High Court’s approach employees are entitled to 10 ‘notional days’ leave per year. The key difference from the ruling of the Full Federal Court is that the duration of a ‘day’ is determined by identifying 1/10th of an employee’s ordinary hours over a two-week period. This equates to 1/26th of their total ordinary hours over the course of a year.
What does this mean?
Part-time employees will have their leave calculated on a pro-rata basis depending on how many hours they work in a fortnight. The judgement also clarifies that part-time employees cannot access the same (or even more) hours of personal leave than full-time employees.
For shift workers working varied patterns of work across fortnights or months, employers can determine the value of ‘a day’ by identifying 1/26th of the employee’s ordinary hours over the course of a whole year. This enables employers to ignore weekly or monthly variations in rosters and assess the total hours of work as a whole.
In application, this is a straightforward return to the accrual of leave on an hourly basis, and the taking of leave – by drawing down from the employee’s pool of accrued paid personal leave – on an hourly basis.
A full-time employee working 38 hours a week and 76 hours a fortnight, would accrue paid personal leave based on an entitlement to a 7.6-hour ‘notional day’. Over the course of a year, a full-time employee would accrue 76 hours of leave or 10 x 7.6-hour notional days.
Part-time employees: A part-time employee working 20 hours a week and 40 hours a fortnight, would accrue paid personal leave based on an entitlement to a 4-hour ‘notional day’, as opposed to 7.6 hours. Over the course of a year, a part-time employee would accrue 40 hours of leave or 10 x 4-hour notional days.
Shift workers: A full-time shift worker (working an average of 38 hours per week over the course of a year), will be entitled to 10 x 7.6 hour days of paid personal leave each year.
You can read the full judgement here.
I encourage you to review these changes carefully to see how they may affect your business and your staff. If you need any further information, or advice specific to your business, please do not hesitate to contact us by email firstname.lastname@example.org or 1300 856 231.
This information and advice is general in nature, based on our interpretation of current legislation and policy, and does not take into account your specific circumstances. You should consider whether the information is appropriate to your needs, and seek professional advice if required.
Pinnacle People Solutions