22 August, 2018
What you need to know
The Fair Work Commission recently ruled on a dispute concerning how an employer was accruing, paying and deducting personal/carer's leave for shift workers.
Deputy President Dean found that shift workers taking personal/carer's leave are entitled to be paid for the ordinary hours that they would have worked on that day.
What you need to do
Companies employing shift workers should check what approach they are taking to the accrual, debiting and payment of personal/carer's leave – is it based on average hours worked or actual hours that would have been worked?
There is currently another matter before the Federal Court, to be decided later this year, in which this issue will be considered. It will be important to see what approach the Federal Court takes on this issue.
Why is this an issue now?
The relevant enterprise agreement provided that personal/carer's leave was to be accrued and taken in accordance with the National Employment Standards, which sets an entitlement of 10 days per annum.
The AWU raised a dispute in relation to how the employer was accruing and deducting personal/carer's leave for some employees undertaking shift work.
The relevant shift work arrangements were:
- The employees worked an average of 36 ordinary hours per week (ie an average of 7.2 hours per shift) or 38 ordinary hours per week (ie 7.6 hours per shift) under three roster patterns.
- The employees accrued a total of 72 hours (ie 10 x 7.2 hour shifts) or 76 hours (ie 10 x 7.6 hour shifts) of paid personal/carer's leave for each year of service.
- In practice, employees worked 12, 10.28 or 8 hour shifts, depending on their roster pattern.
- When taking paid personal/carer's leave, the employees were paid for 12 hours (Roster 1), 10.28 hours (Roster 2) or 8 hours (Roster 3) for each rostered day for which leave was taken, until their accrued leave balance had been exhausted.
The AWU contended that the deduction method adopted by the employer resulted in employees receiving an inferior entitlement to the minimum NES standard of 10 days personal/carer's leave per year. In particular, the AWU argued that the use of an average hourly figure for accrual of personal/carer's leave but of an actual hourly figure for deduction meant that the daily accrual figure was different to the daily deduction figure.
For example, an employee working Roster 1 would exhaust his or her entitlement after being absent for six days, an employee working Roster 2 would exhaust his or her entitlement after being absent for seven days, and an employee on Roster 3 would exhaust his or her entitlement after being absent for 9.5 days.
In contrast, the employer submitted that the amount to be deducted in respect of an absence on paid personal/carer's leave must reflect the number of hours for which the employee is paid.
What comprises a "day" of personal/carer's leave?
Deputy President Dean considered that the matters of deduction and payment of personal/carer's leave had been settled by the Full Bench of the Fair Work Commission in RACV Road Service Pty Ltd v Administrative Municipal, Administrative, Clerical and Services Union [2015] FWCFB 2881 (RACV) and CFMEU v Anglo Coal (Drayton Management) Pty Ltd [2016] FCA 689 (Anglo Coal).
The Deputy President said that these decisions confirm that where an employee takes a day of personal/carer's leave, then a day is deducted from his or her leave balance.
In terms of payment for the day, the employee is paid for the ordinary hours that they would have worked on that day. The entitlement to payment for the day may result in a greater entitlement and overall pay in some cases. For example, in Anglo Coal the Court observed at [10]:
The number of hours normally worked by, for example, an 8-hour day worker and a 12-hour shift worker on a normal or rostered day of work are self-evidently different, by a margin of 50%. Nevertheless, the entitlement to paid leave is not referable to an hourly equivalent; it is expressed in days, and it necessarily follows, I think, that the possibility exists that the statutory entitlement to 10 days leave (and pay) may result in a greater hourly entitlement (and overall pay) in some cases than in others.
Payment is for actual ordinary hours that would have been worked
Deputy President Dean concluded that there is no support for the proposition that payment for a day's absence on personal/carer's leave is to be based on an average number of hours worked each day rather than the actual hours that would have been worked on the day that is taken as personal/carer's leave. That is, the employee is to be paid for the ordinary hours that they would have worked on that day.
Deputy President Dean did not consider that section 63 of the Act, which allows enterprise agreements to include terms providing for the averaging of hours of work over a specified period, or any other section of the Act, varied the accrual, deduction or payment of personal/carer's leave under the NES.
For these reasons, the Deputy President rejected the employer's submissions that the entitlement to 10 days of paid personal/carer's leave means an entitlement to payment equal to the time that would have been worked on 10 ordinary or standard days of averaged ordinary hours ie of 7.2 or 7.6 hours duration. The Deputy President acknowledged that this may result in a greater entitlement and overall pay in some cases.
In respect of payment for the affected shift workers, Deputy President Dean concluded:
- an employee on Roster 1 is paid for 12 ordinary hours for each day for which the leave is taken;
- an employee on Roster 2 will receive 10.28 hours pay; and
- an employee on Roster 3 will receive 8 hours pay for each rostered day for which leave is taken.
Making the case: Insights from Geoff Giudice
There is ongoing confusion about the application of the 10 day personal/carer's leave entitlement in the NES to employees, such as 12 hour shift workers, who work days of non-standard lengths. Although the Federal Court will give the matter further consideration in other proceedings later in the year, it is obviously desirable that the Parliament should act to resolve the issue.
For further information, please contact:
Jane Harvey , Partner, Ashurst
jane.harvey @ashurst.com
