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How a recent court case could have significant ramifications for sick leave entitlements in Australia

Author: Robert Lamb
3 min read
10 September 2019

Key Takeaways

  • More than a million Australian workers could be impacted by a recent court case between Mondelez (Cadbury) v AMWU around the definition of a typical working day.
  • This decision will have ramifications regarding sick leave entitlements particularly in areas where workers work longer than traditional hours in a day.
  • What is the set definition of a notional work day and how that changes sick leave entitlements

Eating too much chocolate can often make anyone feel sickly, but a recent court case between the owners of Cadbury and its workers regarding sick leave entitlements might be taking this to another level.

The outcome of the Federal court case between Mondelez (Cadbury) and AMWU (representing the workers) could have significant ramifications impacting more than a million workers across Australia and potentially set a precedent where workers’ sick leave is calculated on their average working day, rather than a notional 7.2 hour day.

The case was considered so important, three judges were appointed to hear it and the Commonwealth Government was given leave by the Federal Court to intervene in the case.

In the case, Mondelez argue they should pay their staff according to the “industrial meaning” of the work day or 7.2 hours per day of sick leave upheld.

However workers, represented by their union, appealed their leave entitlement claiming it did not adequately reflect fair pay given the hours they were offered for sick leave and carer’s leave were less than if they had worked those days.

The staff at this Cadbury site worked 12 hour shifts each working day and believed that being offered a total of 7.2 hours of sick or carer’s leave each day did not adequately reflect their actual working hours.

They wanted what they believe was their right to be paid 120 hours of sick or carer’s leave – that is 10 days at 12 hours per day of leave – be recognised by the company, as opposed to the 72 hours of leave being offered.

Under the Fair Work Act (Section 96(1)), employees are entitled to 10 days of paid or personal carer’s leave each year. The Act provides parameters for when the leave can be claimed, such as in the event of illness of caring for an immediate family member who is ill.

The interpretation of the Act has historically been employees are entitled to 10 days of sick leave or carer’s leave each year, which equals 72 hours in total. This comes from the National Employment Standard day being of 7.2 hours, or what is called a notional day.

In this case, 72 hours of leave would equate to just six days of commensurate pay for sick leave as opposed to 10.

The majority of the Court agreed and came to the view that on the proper construction of sections 96 and 97 of the Fair Work Act, a day meant the actual day that the worker worked not a notional day.

This decision will have ramifications particularly in areas where workers work longer than traditional hours in a day such as manufacturing, mining and health care and employers may face a large back-pay bill.

Some media commentators have estimated more than a million employees may be affected and the Federal Industrial Relations Minister said “while a review of the judgement and its broader implications is undertaken, employers should review their own payroll systems in light of the decision.

Interestingly it was a 2-1 decision and the judge dissenting was of the view that if this position prevails an outcome would be produce that would create inequities between different classes of employee that the Parliament did not intend.

It may be that the Federal Parliament will intervene and amend the Fair Work Act or the Employer will appeal the decision to the High Court.

As advisors in employment and industrial relations law, we will endeavour to keep you posted.

Addendum: 17 September, 2019 it has been reported that the Commonwealth Government and the Employer will appeal the decision to the High Court.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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