The High Court decision in the matter Mondelez v AMWU [2020] HCA 29 was handed down on 13 August 2020.  It overturned the August 2019 Full Federal Court decision and restored the primary objectives of the Fair Work Act which embody flexible working and fairness at work.

Problems with the Full Federal Court decision:

There was much confusion for employers when the Full Federal Court decision was based on the reading of the word “day” in the National Employment Standards (NES) and applying this to each employee’s working day, whether this was for 7.6 hour days or 12 hour days. Further, it was unclear what employers were to do for employees without set working hours. The implications of this decision were that employers implemented manual leave calculations separate from their ordinary payroll system, and some employees were entitled to nonsensical amount of leave in comparison to their full time hours simply because their working days were longer than other workers.

The High Court decision:

The High Court, with this decision, have overturned this clearly unworkable interpretation of the NES. This main issue in the matter was considering what a “day” meant specifically when calculating an employee’s annual entitlement to “10 days” paid personal/carer’s leave. The High Court held that a “day” 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 decision recognises the purpose of the Fair Work Act and section 96 specifically is to protect employee’s entitlements and promote fairness.

Next Steps for employers:

Employers who amended payroll systems and contracts in accordance with the August 2019 decision need to review and update these changes. Additionally, there may be scope for employers who have significantly changed employee’s leave entitlements, to wind these accruals back. However, this would need to be reviewed and considered on a case by case basis and carefully considered to ensure fairness is continuously upheld.

In addition to employers that need assistance with the above, this decision is a timely reminder to ensure that your employment contracts and payroll systems are up to date and in accordance with this decision as well as any other changes that have been implemented due to our current environment.

Make sure you get in touch for advice in these areas specific to your business.

Stacey Brennan
Lawyer and Chief of Staff