Your next steps with changes to accrual of Personal/Carer’s leave
Last updated: 25 August 2020
On 13 August 2020, the High Court of Australia (HCA) handed down a decision clarifying how personal/carer's leave is accrued and taken under the National Employment Standards (NES).
The HCA clarified that:
- The entitlement to 10 days of personal/carer's leave under the NES is calculated based on an employee's ordinary hours of work, not working days.
- 10 days of personal/carer's leave is calculated as 1/26th of an employee's ordinary hours of work in a year.
The HCA decision overturns a decision made by the Full Federal Court of Australia (FFCA) in August 2019 which we previously covered below. In that decision, the FFCA held that personal/carer's leave accrues in working days, not hours.
So what does this mean for employers that have been accruing leave in working days, following the FFCA decision?
In order to ensure compliance with the NES, it has been advised that employers:
- Commence accruing personal/carer's leave on a per ordinary hours worked basis; and
- Reverse any accruals that were made as a result of the original FFCA decision, ie accruing in working days.
In light of this advice, our team has prepared a support article below on how to update employee settings to accrue leave correctly and how to reverse day accruals:
New to KeyPay?
Any new business created from 28 August 2020 will no longer include the system default settings configured for accrual of personal/carer's leave in days. This also applies to any new installs of pre-built Awards (but does not affect any updates to existing pre-built Awards).
The system default settings include:
- Personal/Carer's Leave (10 days) leave category;
- Personal/Carer's Leave (10 days) Taken work type;
- Permanent Leave - No Loading (10 PCL days) leave allowance template (and the equivalent stated based leave allowance templates for pre-built Awards); and
- Permanent Leave - With Loading (10 PCL days) leave allowance template (and the equivalent stated based leave allowance templates for pre-built Awards)
The default settings will still be available in all existing businesses as they may still be in use.
Last updated: 21 February 2020
On 21 August 2019, the Full Federal Court of Australia handed down a decision in Mondelez Australia Pty Ltd v AMWU, regarding the interpretation of how personal/carer’s accrues under the National Employment Standards. The Fair Work website gives a full breakdown of it here and provides answers to FAQs here.
When we first read about this change, it did take us a while to iron out the details of what it meant moving forward for businesses, so we don’t blame you if you’re still scratching your head and wondering what to do next. Because navigating these types of changes can be tricky, we’re here to help make it easier to understand what your next steps are.
The changes in a nutshell:
- 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 must be calculated in working days and not hours as it previously was. A working day is defined as the portion of a 24 hour period that an employee would be working.
- 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, an equivalent part-day is deducted from the employee’s accrued leave balance.
KeyPay is focused on making every aspect of the payroll simpler for businesses to have a smooth pay run process. With leave data being an integral aspect of the pay run, we wanted to provide a solution that promoted clarity and ease of transition for businesses to help manage this change.
We’re therefore introducing a new personal/carer's leave category that complies with the Fair Work Commission's decision on the accrual of this leave. Additionally, we will be updating our Awards to incorporate the new leave settings. Once updates to Awards are available, users will be notified for installation via the payroll dashboard.
Next steps for businesses:
So where does all of this leave you? New businesses created in KeyPay from 18 Feb 2020 will automatically have the new personal/carer’s leave settings applied. However, businesses created prior to that date will need to migrate their existing leave settings to the new version.
If you’re an existing business that needs to transition, our team have written great support articles that guide you through key touch points you need to cover to transition to this new personal/carer’s leave accrual method:
- General introductory information regarding personal/carer's leave;
- Transitioning from the old personal/carer's leave category to the new version;
- Businesses using pre-built Awards: Transitioning from the old personal/carer's leave category to the new version;
- Understanding the accrual calculations in the personal/carer's leave context panel.
We promise that by following these support articles you’ll be on your way to a smooth pay run process and may even forget there were these changes in the first place! After all, making complicated things simple for you and your business is KeyPay’s forté.