Changes to Personal Leave Impacts All Employers

A recent decision by the Federal Court has significant impacts on how personal leave is managed within businesses..

The decision basically has three significant impacts:

  • An employee is entitled to be paid according to their “working day: – the ordinary hours they would normally work on the day taken off for personal leave. This means that if a person normally works a 10 hour shift on a particular day, they will be paid for the 10 hours.
  • Personal leave is to be considered taken and accrued in “working days” and not hours – for example – the entitlement is for “10 days” personal leave not “76 hours” as most pay systems currently calculate. Another way to look at this is that every 5.2 weeks, an employee will accure an entitlement to a full day of leave.
  • Finally, the entitlement for all permanent employees is “10 days”. There is no “pro-rata” for part-time employees or for shift workers. For example – a part-time employee working 1 day a week would be entitled to 10 days a year personal leave, not the previously utilised pro-rated accrual.

While there may be an appeal of this decision, at the moment, the decision reflects the “state of the law”. This means that at this time, your system of accruing personal leave will need to reflect this decision – particularly for your part-time employees or shift workers.

Most payroll systems currently manage accrual of leave in hours. As a result, we recommend:

  • You review the method of accrual for personal leave being utilised by your pay roll system.
  • You review your leave policy and procedures to ensure that you are currently complainant.

If you have any questions regarding this article, or its contents, please contact us!

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