Today, a majority of the High Court has set aside the decision of the full Federal Court in Mondelez Australia Pty Ltd v AMWU & Ors  FCFCA 138. Kiefel CJ, Nettle and Gordon JJ (and Edelman J in a separate judgment) upheld the appeals of Mondelez and the Federal Government on the basis that the proper interpretation of the word 'day' under section 96(1) the Fair Work Act 2009 (Cth) (FW Act) in respect to personal leave entitlements is a 'notional day,' rather than the 'working day' interpretation adopted by the full Federal Court.
The decision confirms (what many already thought was the case and in line with broad employment practice) that personal/carer's leave accrues and is paid based on ordinary hours of work, rather than the number of days. It affirms the purpose of section 96, which is to protect employees against loss of earnings when they need to take sick or carer's leave by reference to their ordinary hours of work. This means the amount of leave accrued does not vary according to the pattern of hours of work. This is of particular relevance to the entitlement for shift workers and part time workers, who would have had an enhanced entitlement under the 'working day' interpretation adopted by the full Federal Court.
The High Court majority (Gageler J dissenting) considered a number of interpretation principles to come to its view. As Justice Edelman (in a separate judgment) put it, to give effect to the meaning that a reasonable, informed reader would understand Parliament to have intended by the words used in their context.
The majority found the 'notional day' interpretation:
- is consistent with the objects of the FW Act to provide fairness, flexibility, certainty and stability for employers and their employees;
- accords more broadly with the FW Act and the context of the various uses of the word "day";
- is reinforced by the way the entitlement was described and the examples provided in the Explanatory Memorandum to the Bill;
- is consistent with the legislative history by reference to the previous Workplace Relations Act and intent for the entitlement to be simplified but not changed.
The majority echoed the concerns of employers by stating that the alternate 'working day' construction would create 'not only unfairness but also uncertainty' giving rise to 'absurd results' contrary to the legislative purposes of the FW Act, the extrinsic materials and the legislative history.
The High Court's decision is a relief for employers who would otherwise have been faced with a complex issue of reviewing past entitlements and resetting payroll systems and practices moving forward. It is a welcome return to certainty for employers in otherwise uncertain times.