High Court restores original understanding of personal leave

The High Court (4-1 in favour) overruled the contentious ruling of the Full Federal Court, finding that employees are entitled to 10 “notional days” of personal leave a year by reference to their ordinary working hours. This contrasts with the Federal Court’s view that 10 days of personal leave entitles all employees (regardless of their actual working hours) to 10 x 24-hour periods off work each year.

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The ruling should come as a relief to employers across the country, given that almost all payroll systems utilised in Australia can accrue and deduct leave according to the approach identified in the High Court judgment.

The judgment also dispenses with the argument that part-time employees can access the same (or even more) hours of personal leave each year when they do not work the same load as full-time employees.

Under the judgment, part-time employees are still entitled to 10 days’ leave, however, these are ‘notional days’ and the number of hours in each day of leave is to be calculated on a pro-rata basis depending on how many hours the part-timer works in a fortnight.

Practically speaking, this is a return to the accrual of leave on an hourly basis and the taking of leave, by drawing down from the employee’s pool of accrued paid personal leave on an hourly basis.

SOURCE: Joe Murphy, Managing Director - National Workplace Australian Business Lawyers & Advisors and Luis Izzo, Managing Director - Sydney Workplace Australian Business Lawyers & Advisors.

PUBLISHED: 15 SEPTEMBER 2020

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