New Sick Leave Laws

  • 1
  • Question
  • Updated 1 month ago
When will Reckon be updated so we can reflect the new sick leave laws so they accrue in days not hours.  I know initially it was thought to be just affecting shift workers but according to the information just updated on the Fair Work Website:

On 21 August 2019, the Full Federal Court of Australia handed down a decision in Mondelez Australia Pty Ltd v AMWU [2019] FCAFC 138. The decision deals with the method of accruing and taking paid personal/carer’s leave for the purposes of the National Employment Standards under the Fair Work Act 2009.

Although the Full Federal Court’s decision is the most recent authority on the current state of the law, the Australian Government and Mondelez Australia Pty Ltd have applied to the High Court seeking special leave to appeal the decision. As the outcome of those applications (and any subsequent appeal) may impact upon the FWO’s advice in these matters, the FWO will review its advice at the conclusion of those proceedings. In the interim, you may wish to seek your own legal advice on this issue.

In the decision, the majority of the Full Federal Court determined:

  • Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.
  • The leave protects those employees’ income when they are entitled to be absent from work due to illness or injury (or providing care or support to a family or household member who is ill, injured or suffering from an unexpected emergency).
  • The leave must be calculated in working days, not hours. A working day is the portion of a 24 hour period that an employee would otherwise be working.
  • An employee’s entitlement is expressly based upon time working for the employer and is expressly calculated in days.
  • For every day of personal/carer’s leave taken, an employer deducts a day from the employee’s accrued leave balance. If an employee takes a part-day of leave, then an equivalent part-day is deducted from the employee’s accrued leave balance.
I know it is being appealed but it is currently the law (starting 1/9/19) and as far as our employment lawyers are concerned we should be following it.
Photo of Tania Richards

Tania Richards

  • 120 Points 100 badge 2x thumb

Posted 1 month ago

  • 1
Photo of Bruce

Bruce

  • 508 Points 500 badge 2x thumb
This whole issue is going to cause significant angst for many of us until such time as it is fully resolved.

In my opinion, any change in the system needs to built in a way in which it is optional for us to apply. 
  • my understanding is that not all awards describe personal/carer's leave in days; some use hours.
  • in addition not all employment law specialists appear to be as black and white about its application as (it appears) your employment lawyers are.   I know of at least one who is saying continue as you were but keep clear records so that if the decision is upheld it can be implemented.

Also, can you elaborate on the "starting date of 1/9/19"; in my (quick) reading of Mondelez I didn't see anything which said the this was to be the starting date and I've seen a range of varying comments on the topic, e.g.
  • it should apply from the date of the decision which was pre 1/9/19
  • because the ruling is effectively clarifying what the National Employment standards mean, it should apply from the date of the standards
  • it should apply from the date the claim in respect of Mondelez was lodged
  • it should apply from 1/9/19 because this is convenient date.
In short, this is giving me a headache!!


(Edited)
Photo of Kevin Russell

Kevin Russell, Accredited Partner

  • 52,182 Points 50k badge 2x thumb
Bruce. I agree
Photo of Tania Richards

Tania Richards

  • 120 Points 100 badge 2x thumb
I agree Bruce - it is going to cause great angst & yes it should be an optional days or hours tab.

As far as the 1st September goes - I did get that from my employment lawyer but in re-reading their fact sheet that was the date they were working out the conversion for full time staff & doesn't say anything about the part time staff so I will need to clarify that.

Hi Tania

 

  • The leave must be calculated in working days, not hours. A working day is the portion of a 24 hour period that an employee would otherwise be working.

     

  • An employee’s entitlement is expressly based upon time working for the employer and is expressly calculated in days.

     

     

    I believe the reason for specifying “days” (over hours) is simply to confirm that the timeframe must be equivalent to an employee’s normal work day eg if they work a 9 hour day, the employee must accrue leave on - & be eligible for taking - a full 9-hr day.

     

    Whatever the employee’s usual daily hours are, their leave days will be the leave hours available divided by their normal daily hours eg if an employee has 30 Hrs Sick Leave available & they normally work a 10-hr day, they have 3 days.

     

    There are some Payroll programs that only calculate in days for a standard 7.6 hr day maximum & I think this is more the issue.  I don’t think Reckon’s Leave feature will need updating as the whole case that led to this was regarding leave on a longer work day.

     

    That’s my understanding.

     

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    Reckon Accredited Professional Partner Bookkeeper / Registered BAS Agent (No: 92314 015)

    (Specialising EXCLUSIVELY in Reckon Accounts / Reckon Accounts Hosted)

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    0422 886 003

    shazinoz2@bigpond.com

    www.accounted4bs.com


Photo of Linda Putland

Linda Putland, Accredited Partner

  • 15,824 Points 10k badge 2x thumb
It should also be considered/noted when setting leave accruals - that whatever number of hours you use when calculating the 10 days personal and 20 days annual leave - is the same number of hours you use when leave is taken... for example - if a worker generally works 40 hours per week - then calculate your leave accrual in Reckon Hours - based on 160hrs of annual leave and 80 hours of personal leave - when they take a day of leave - then deduct 8hrs of accrual...(as opposed to accruing 152 hrs/76 hrs annual/personal - and deducting 7.6 hrs of leave when a day is taken...

If this logic is applied to accruals for a shiftworker - then it should all work out?


Photo of Kevin Russell

Kevin Russell, Accredited Partner

  • 52,252 Points 50k badge 2x thumb
Correct Linda. The percentage doesn't change because of the length of the work day. I really think it was just a try on by the union. Good on them for having a go though. They've been knocked around a bit. And if you read the back story, they never volunteered to move to ten hour days. It was forced on them.
(Edited)
Photo of Bruce

Bruce

  • 508 Points 500 badge 2x thumb
Linda, Kevin

I disagree with your assessment in relation to accruing personal leave.  This is because for people who work long shifts, we now have a situation of varying entitlements.  Using Linda's 40 hour week example:
  • for a 'normal' worker working 5 x 8 hours, they are entitled to 10 days or 80 hours, but
  • for a worker who does 4 x 10 hour days, the effect of Mondolez is that the employee is entitled to 100 hours (=10 days) sick leave, and
  • It becomes even more complex for an employee who works uneven shifts; e.g for somebody who works 4 x 9 hours days and 1 x 4 hour day they would be entitled to between:
    - 40 hours if all their 10 sick days were taken on 4 hour days 
    - 90 hours if all 10 sick days taken on the 9 hour days.
A couple of additional comments re entitlements
  • the ruling as it stands only relates to personal leave, it does NOT relate to annual leave
  • as best I can tell, the same issue will apply to the personal leave for part time employees.   So for an employee working 3 x 8 hour days/week, they will be entitled to 80 hours (the same as our 'normal' employee above.)
Enough about entitlements.   Accruing becomes more complex, and I firmly believe that clarification is going to be needed from the authorities.  A couple of cases that spring to mind
  • For those people who don't work the same number of hours every day how much do I accrue - I can't predict when they are going to take their personal leave.   (Not as big a problem if unused personal leave is not carried forward from year to year, but unfortunately none of my clients fit into this category.) 
  • for employees who have been working odd hours, what is their "starting accrual" if they change their regular working patterns.  
Sorry to be so long winded, but it is going to need a better mind than mine to resolve this!
(Edited)

Hi Bruce

 

It certainly complicates things but yes, the whole premise of the case is because an employee can’t be disadvantaged financially due to being off work on (Sick) Leave.  As a result, the proposal is that they must be paid Sick Leave for the same number of hours as their ordinary work day.

 

So whatever an employee’s usual work day hours are on the day(s) they take leave are what is to be paid.

 

The entitlement determination is more about the hours & yes, you are exactly correct in that an employee who works a longer “ordinary day” (eg a 9 hour day rather than an 8 hour day) will be entitled to more Leave “Hours” because their “ordinary day” is longer.  However, it doesn’t change their “number of days” entitlement which hasn’t been affected.

 

In your example of an employee working 3 x 8 ordinary-hr days/week (eg 24 hrs p/wk), their leave entitlement is still pro rata’d as has been the case for a long time. 

They should be accruing per hour on the hours worked & their entitlement will still be the equivalent of 20 days (4 weeks) AL & (10 days) 2 wks SL HOWEVER, their “week” is 24 hrs so:

 

  • 24 Hrs x 2 weeks = 48 Hrs SL entitlement

(This equals their 3 x 8-hr days over the 2 weeks or 6 out of the 10 days)

 

  • 24 Hrs x 4 weeks = 96 Hrs AL entitlement

(This equals their 3 x 8-hr days over the 4 weeks or 12 out of the 20 days)

 

It doesn’t matter how many “days” they actually use it over though (up to their ordinary work day hours) as this doesn’t change the accrued entitlement - & therefore payment they receive - for the above.

They could take 1 hour on 1 day, 7 hours on another etc   

 

Whilst the Mondolez case specifically referred to Sick Leave, if & when the Law is officially updated, it can only be expected that this will also apply to any other accruable-on-hours-worked leave (eg Annual) due to the whole reasoning behind the change.

 

I’ve always found it best practice to accrue Sick Leave (SL), Annual Leave (AL) & LSL “Per Hour” on an employee’s ordinary permanent hours – whether that be a 4-hour day or a 10-hr day.

(There are obviously a few exceptions but as a general rule, most hours paid at ordinary rates - eg OTE - should be accruing applicable Leave)

 

“Per Hour” accruals ensure that part-time, shift variations & changes to regular working patterns are all accounted for in the correct accrual proportions as & when the employee works.

(SL, AL & LSL all carry forward from year to year as the historical balances are based on whatever hours have been previously worked)

 

(NB As most of the Leave types above are still accruable whilst on/taking/payment of Leave, “worked” also refers to paid leave taken where applicable)

 

Hope that helps  :)

 

 

Shaz Hughes Dip(Fin) ACQ NSW, MICB

Reckon Accredited Professional Partner Bookkeeper / Registered BAS Agent (No: 92314 015)

(Specialising EXCLUSIVELY in Reckon Accounts / Reckon Accounts Hosted)

Accounted 4 Bookkeeping Services

Ballajura, WA

0422 886 003

shazinoz2@bigpond.com

www.accounted4bs.com