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Cadbury sick leave case heads to High Court

Controversial decision on the way personal/carers' leave entitlements should be calculated.
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Cadbury sick leave case heads to High Court

Cadbury sick leave case heads to High Court

23 September 2019

The Morrison government will seek leave in the High Court to appeal a controversial decision on the way personal/carers' leave entitlements should be calculated.

The decision related to production workers at Cadbury's chocolate factory in Tasmania, and how to interpret the word ‘day’ when calculating shift workers’ entitlements.  
 
A full Federal Court last month found that a Mondelez (which owns Cadbury) employee who worked three 12-hour shifts each week accrued 120 hours of leave each year (calculated as 10 days x 12 hours).

The court further found that a worker who did the same 36-hour week across five shifts would only accrue 72 hours per year (10 x 7.2 hours). 

Prior to the Mondelez v AMWU and Ors decision, the government says employers and employees understood that full-time staff who worked a 38 hour week were entitled to accrue 76 hours of personal leave each year, based on the number of ordinary hours they worked over a normal two-week period. 
 
IR Minister Christian Porter said "that had been the situation that existed for decades and it was meant to remain the situation when Labor introduced the Fair Work Act in 2009, which changed the wording of the provisions regarding how leave was to be accrued to '10 days' per year." 
 
The minister said the decision needed to be appealed because it had created significant inequities between employees, while also exposing  employers to cost increases that could reach an estimated $2 billion per year. 
 
“Labor was repeatedly warned by business and industry groups when it drafted the Fair Work Act that the change to its definition might one day be interpreted this way,” Mr Porter said. 
 
“But Labor reassured them that the status quo would be maintained, along with the fair and equitable situation that ensured employees who worked the same total number of hours each week would get the same amount of accrued leave. 
 
“The Government believes that Australian employers and, potentially, Australian taxpayers should not be forced to foot the bill for Labor’s mistake, which is why it is necessary to seek to clarify the situation by mounting an appeal.”  

What the full court decision means


The change to the definition is relevant to every business where shifts are worked.  
 
For example, in a business where two part-time employees both work 20 hours each week, but one chooses to work their hours across five shifts and the other across four shifts, one would be entitled 40 hours personal leave per annum (10x4 hours) and the other 50 hours (10x5 hours). 
 
Similarly, an employee who works just one 7.6 hour shift each week would be entitled to 76 hours leave – 10 x 7.6 hours. 
 
In deciding whether to seek leave to appeal the decision, the Government noted the dissenting opinion of Justice O’Callaghan who agreed with Mondelez that the traditional method of calculating leave should continue to apply as the inequities created were not intended by parliament.  
 
Mondelez has announced it intends to lodge its own appeal. 

See also: Sweet victory for Cadbury workers: landmark ruling on sick leave

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