Mondelez High Court Judgement – What does it mean for your payroll teams
Many businesses will be having a few good fist pump moments today as we read the judgement handed down by the high court today which overturned the previous Federal Full Bench decision regarding personal leave entitlements.
The high court ruled that the previous order be set aside, an in its place declared:
“The expression '10 days' in s 96(1) of the Fair Work Act 2009 (Cth) means an amount of paid personal/carer's leave accruing for every year of service equivalent to an employee's ordinary hours of work in a week over a two-week (fortnightly) period, or 1/26 of the employee's ordinary hours of work in a year. A 'day' for the purposes of s 96(1) refers to a 'notional day', consisting of one-tenth of the equivalent of an employee's ordinary hours of work in a two-week (fortnightly) period”
This decision had the potential to extend beyond the personal leave space and extend into other leave entitlements covered by the Fair Work Act with what essentially became a debate on what the definition of a ‘day’ is within the act, however the High Court has instead supported the previously accepted industry practice based, in part, on the underlying intent of the fair work act, and the explanatory memorandum that went behind the legislation when it was formed.
(you can read the full judgement here).
Essentially, common sense has prevailed, something we are celebrating here at payroll edge consulting.
The high court decision is final so what is next?
It will depend a lot on what your business has done since the previous decision in August 2019 as to what you need to do next.
Some businesses updated their systems and processes in regards to how they accrued and paid personal leave, while others took a more pragmatic approach to the issue opting to instead hold off on broad system changes and instead addressed individual scenarios on a case by case basis to manage any risk or exposure in the interim.
Here is a simple place to start in your business:
Review what your business has done in the interim and what may need to be reversed.
Actions that need to be reversed should be clearly documented, and considerations made to what commitments the business made to employees and whether you need to recover any overpaid entitlements.
Communicate to all your stakeholders including managers and any affected staff about what will be happening and when it will occur. If there are no actions that the business needs to take, let your staff know so that people are not left waiting, concerned that there is a hammer about to be dropped on them.
Execute the changes necessary in your systems.
Gemma McDonnell-Mossop
Independent Payroll Consultant
Payroll Edge Consulting can help your teams to design an approach specific to your specific circumstances. Contact us to find out how.