Compliance

Your next steps with changes to accrual of Personal/Carer’s leave

Carissa Tan

February 21, 2020

min read

‍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). This involves changes that may affect the Australian clients of accountants, bookkeepers and outsourced payroll providers, so it's important that you're aware of the decision.

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 and payroll providers 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 and payroll providers:

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:

Personal/Carer's Leave: Migrating from day accruals to hourly 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 you and your clients, 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.

	Previous	Now
Entitlement	76 hours per year (pro rata for PT employees)	10 days per year (for both FT and PT employees)
Accrual method	Hours per hour worked	Days per day worked
Accrual rate	0.03846 hours	0.02739726 days or 0.0273224 days (in a leap year)
Taking leave	Deduct hours from employee balance	Deduct a day or part day from employee balance

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KeyPay’s solution:

KeyPay is focused on making every aspect of the payroll simpler for payroll providers and their clients 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 you to help manage this change for businesses.

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 February 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 have existing businesses in KeyPay that need to transition, our team have written great support articles that guide you through key touch points you need to cover to transition them to this new personal/carer’s leave accrual method:

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 clients is KeyPay’s forté.

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Disclaimer: The information in this article is current as at 6 June 2022, and has been prepared by Webscale Pty Ltd (ABN 70-154-693-955) and its related bodies corporate (KeyPay). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. KeyPay does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.