The correct way to calculate an employee’s entitlement to sick leave has been clarified in a High Court decision.
Employees are entitled to 10 days sick leave (personal/carer’s leave) under the Fair Work Act. However, the method of calculating an employee’s entitlement to sick leave can often be confusing if an employee does not work a traditional 5 day working week.
In a recent case, two Cadbury employees argued that because they work three 12 hour shifts per week, each sick day taken should be paid at 12 hours per day. The employer argued the employees were entitled to sick leave paid at 7.2 hours per day, based on the employees’ average weekly ordinary hours divided by 5.
The employer’s argument was successful in this case. The court determined a “day” of sick leave is calculated based on an employee’s ordinary hours of work, rather than an employee’s working days. The reference to 10 days of sick leave in the Fair Work Act is based on an employee working two standard 5 day work weeks. As not all employees work a standard 5 day week, the correct way to calculate an employee’s entitlement to sick leave is 1/26 of an employee’s ordinary hours of work in a year.
This method is designed to avoid any unfairness to employees who are employed under various rostering arrangements. For example, if the employees in this case were successful, they would accrue 120 hours of sick leave per year, while employees working the same number of hours but over a spread of 7.2 hours per day, 5 days a week would only accrue 72 hours of sick leave per year.
What does this case mean for my business?
This decision provides certainty about how paid sick leave is accrued and taken.
While it will be business as usual for many employers and employees, the decision is expected to have implications for shift workers in Australia.
It is also a reminder of the uncertainties surrounding employment entitlements. Employers should not be complacent about their obligations to their employees.
If you have any questions, please contact a member of our employment law team.