In a decision that will be welcomed by employers, a majority of the High Court has overturned^[1] the judgement of the Federal Court in the Mondalez^[2] decision.

The High Court has now given definitive guidance on the proper interpretation of the word ‘day’ in the context of personal/carer’s leave for the purposes of s96 of the Fair Work Act 2009 (Cth) (The FW Act).

Background

The case concerns two employees of Mondalez Australia Pty Ltd (Mondalez) at its Cadbury chocolate factory. The employees each worked 36 ordinary hours per week in three shifts of 12 hours duration each.

Mondalez had been accruing 96 hours of personal/carer’s leave for the employees each year. However, when the employees took sick leave, 12 hours were deducted from their personal/carer’s leave balances. This meant that the workers involved did not accrue sufficient leave to cover ten actual working days (i.e. calendar days) of personal/carer’s leave.

Federal Court case

Before the Federal Court, Mondalez argued for a declaration that under the relevant enterprise agreement, when the employees are absent from a 12 hour shift, 12 hours should be deducted from their personal/ carer’s leave balance. Mondalez was opposed the Australian Manufacturing Workers Union (AMWU).

The argument came down to the interpretation of s96 of the FW Act. S96(1) of the FW Act provides that for each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.

The issue between the employees (with their union) and the company was whether the word ‘day’ in s96(1) refers to:

• A ‘notional day’, consisting of one tenth of the equivalent of an employee’s ordinary hours of work in a two week period (the Mondalez interpretation), or 
• A ‘working day’, consisting of the portion of a 24 hour period that would otherwise be allotted to working and thereby authorising an employee to be absent without loss of pay on ten working days per year (the AMWU’s interpretation).

The Full Federal Court agreed with the AMWU and refused to grant the declaration sought by Mondalez  The Federal Court found that the word ‘day’ in s96(1) of the FW Act refers to ‘the portion of a 24 hour period that would otherwise be allotted to work’. Commentators have interpreted this simply as being ‘A day means a day.’

The High Court Decision

Mondalez appealed the Federal Court decision and the Federal Minister intervened in support of its application.

The majority of the High Court (with Justice Gageler dissenting) rejected the finding of the Federal Court on the basis that it would give rise to absurd results and inequitable outcomes and would be contrary to the legislative purpose of fairness and flexibility. For example, the High Court pointed out that on the ‘working day’ construction, it was possible for part time workers to be entitled to the same amount or more leave than some full time workers who worked less days.

Moreover, the High Court definitively declared:

“The expression ’10 days’ in s96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer’s leave accruing every year of service equivalent to an employee’s ordinary hours of work in a year. A ‘day’ for the purposes of s96(1) refers to a ‘notional day’, consisting of one-tenth of the equivalent of an employee’s ordinary hours of work in a two-week (fortnightly) period”

Such a decision was reached with reference to extrinsic materials including the Explanatory Memorandum for the Fair Work Bill 2008 finding that examples given were consistent with the notional day construction.

Implications

The decision provides clarity for employers of employees who work longer daily hours than standard ordinary hours (such as 12 hour shift workers) in their interpretation of leave provisions and will be welcomed. Many employers have had to deal with some uncertainty over the past year since the original decision of the Federal Court was handed down However, it remains to be seen whether this may give rise to further claims within the context of enterprise bargaining.

[1] Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, Minister for Jobs and Industrial Relations v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] HCA 29 (13 August 2020)
[2] Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union Known as the Australian Manufacturing Workers Union (AMWU) [2019] FCAFC 138 (21 August 2019)