Workplace insight: What's in a "day"? Accruing and paying personal leave entitlements

21 May 2019

So, your employee has called in sick for the day, you are aware they are entitled to be paid their accrued personal/carer’s leave (sick leave) entitlement for that day, but how many hours are paid for in a “day”? This question has recently been considered by the Courts and contrary to a common belief a ‘day’ is not necessarily a standard 7.6 hours. If an employee’s ordinary hours are greater than this standard (such as a shift worker) it will be reflected in their sick leave entitlements.

The National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (Act) entitle full-time employees to 10 days of paid sick leave per year, with part-time employees accruing their sick leave on a pro-rata basis. What constitutes a “day” for the purposes of sick leave has recently been examined in a number of cases, including RACV V ASU [2015] FWCFB 2881 (RACV), CFMEU v Anglo Coal (Drayton Management) Pty Ltd [2016] FCA 689 (Anglo Coal), and AWU v AstraZeneca Pty Ltd [2018] FWC 4660 (AstraZeneca). Each case considered the rate at which sick leave should accrue and the rate that it is deducted in light of an employee’s ordinary hours. The case of Mondelez Australia Pty Ltd v AMWU & Others (VID 731/2018) (Mondelez) is currently before the Federal Court for determination on this question.

The case of RACV examined the term “day” and noted that the Act did not contain a special definition of this word. On this basis, it was held that the word “day” should be given its ordinary meaning. The previous Workplace Relations Act 1996 (Cth) expressed the entitlement to leave in hours. Conversely, the entitlement is now expressed in the Act in days. This distinct difference in the expression of the entitlement to leave suggests a deliberate policy decision to abandon the use of hours to express leave entitlements. Consequently, the RACV case determined that a “day” should not be defined as a certain amount of hours. In the context of sick leave, a day should refer to an authorised absence from an employee’s working time over a 24 hour period.

In the case of Anglo Coal, the company had employed employees on three different types of rosters: 8.5 hour shift workers, 10.5 hour shift workers and 12.5 hour shift workers. The enterprise agreement in question provided all employees with an entitlement to 127.5 hours of sick leave per year, regardless of which type of roster the employee worked.

The rate of sick leave as stipulated in hours was intended to be based on an employee who worked 8.5 hour shifts and was entitled to the equivalent of 15 day’s sick leave. This inference was applied across the board, entitling all types of workers to 15 days of sick leave at their equivalent hours.

His Honour held in the Anglo Coal case, that the entitlement to paid sick leave is not translatable into an hourly equivalent on the basis that the Act refers to the entitlement as being 10 days of sick leave per annum and, therefore, has the result of a greater hourly entitlements in some cases.

The Anglo Coal case went further and stated that sick leave was to be accrued and paid in accordance with the ordinary hours worked. Therefore, on proper construction of the relevant enterprise agreement, an employee who worked 12.5 hour shifts, and cashed out their sick leave entitlement of 127.5 hours, would be paid the same amount as if they had worked 187.5 hours, or the equivalent of 15 days.

The AstraZeneca case made reference to both the RACV and Anglo Coal cases, amongst others, in determining that AstraZeneca employees were not receiving their full 10 days of sick leave as they were consistently working ordinary hours above a standard 7.6 hours per day. The key problem with the approach that had been taken by AstraZeneca was that it used an average hourly figure for the accrual of sick leave, but proceeded to use an actual hourly figure for the deduction. Therefore, the daily deduction figure exceeded the daily accrual figure, and thus the full NES entitlement could never mathematically be achieved.

The case of Mondelez is currently before the Full Court of the Federal Court for determination which will consider the method of accruing and paying sick leave in accordance with the NES. Mondelez implemented an enterprise agreement which in its view, provided a more generous entitlement to sick leave of 96 hours per annum rather than 76 hours per annum (calculating a “day” as a standard 7.6 hours). However, Mondelez employs shift workers who ordinarily work a 12 hour shift, not a 7.6 hour shift. As such, taking into account these shift workers working 12 hour shifts and previous case law, their sick leave entitlement would be 120 hours (calculating 10 days at 12 hours per day).

Take Away for Employers

Employers need to carefully draft enterprise agreements, individual flexibility agreements and/or employment contracts when referring to sick leave, particularly in circumstances where the intent is to provide a ‘more generous’ entitlement to sick leave. Stipulating an hourly equivalent, even if it appears generous, will be determined in light of an employee’s regular roster or work pattern in terms of days.

These cases demonstrate that the Act has been interpreted favourably for employees. For the purposes of sick leave, a “day” has been interpreted as having its ordinary meaning and not necessarily as 7.6 hours. Therefore a “day” will be determined to be the ordinary hours in a 24 hour period that an employee would have worked if they had not utilised their sick leave entitlements. This determination remains the same if the employee is entitled to cash out their sick leave. The Full Court decision expected in Mondelez should give greater certainty as to what employers should do in managing sick leave entitlements.

Please contact the HWL Ebsworth Workplace Relations and Safety team to discuss how your business allows employees to accrue and take personal leave entitlements, and any potential exposure to risk, or in relation to any other employment or workplace issue.

This article was written by Heinz Lepahe, Partner, Michelle Chadburn, Associate and Brianna Heley, Law Graduate

Heinz Lepahe

P: +61 7 3169 4854

E: hlepahe@hwle.com.au

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