Minister recommends payroll review in light of Cadbury IR decision

The landmark federal court ruling has implications for all businesses across Australia

Two employees of Cadbury’s factory in Tasmania and the Australian Manufacturing Workers’ Union (AMWU) have successfully challenged a Federal Court case brought by the employer to pay sick leave at a rate of 7.6 hours day, despite their employees working 12-hour shifts.

The decision could have an impact on other industry sectors beyond manufacturing with similarly long shifts such as mining and healthcare.

As reported by the ABC, Unions Tasmania secretary Jessica Munday commented that “It’s a good decision that confirms that workers who work long shifts longer than standard days will make sure they get enough sick leave that reflects the hours that they work”.

“This should send a clear message to employers that actually shift workers get the entitlements as they stack up against their working day.”

Cadbury’s parent company Mondelez (formed from a division of Kraft in 2012), was represented by lawyers from The Australian Industry Group (AIG). AIG said there would be “substantial cost implications” for a large number of employers if the Federal Court’s decision is upheld. The company said it may choose to challenge the decision.

Advice for employers to maintain compliance

The Federal Industrial Relations Minister Christian Porter has some advice for employers who feel the judgement may affect them.

“While a review of the judgement and its broader implications is undertaken, employers should review their own payroll systems in light of the decision,” Mr Porter said.

“If employers or employees have questions about the implications of this decision for them, they may wish to contact the Fair Work Ombudsman, the agency responsible for providing education, assistance and advice about the national workplace relations system.”

UPDATE: The Morrison Government has announced it is seeking leave, in the High Court, to appeal the Mondelez case. Mondelez has also announced it intends to lodge its own appeal.

Cadbury’s century of worker relations

The Cadbury’s chocolate factory, upriver from Hobart in Claremont, was founded in 1922 and is the largest chocolate factory in the Southern Hemisphere. It has been a celebrated fixture of the Tasmanian economy for nearly a century.

Cadbury has traditionally had a reputation for a commitment to staff welfare. The Hobart factory was modelled upon Cadbury’s original Bournville facilities, and included housing, shops, and social and sporting facilities for employees, many of which are today heritage listed.

However, Cadbury’s take over by Kraft foods in 2010, and a global multi-billion-dollar cost-cutting program in 2014 affected Cadbury’s significantly, with the closure of factories in countries including Ireland, Canada, the United States and New Zealand. In 2015 the Claremont factory reduced its work force by 80 and in 2017 closed its visitor’s centre and laid-off another 50 workers.

Like any manufacturer, the staff reduction over time reflects the impact of automation. However, the Mondelez experience should serve as a warning to employers that you can’t get away with reducing costs through the misinterpretation of award conditions, deliberate or otherwise. Compliance and underpayments issues are now heavily scrutinised by Fair Work and extensively covered by the mainstream media. The current workers – who reportedly cheered the court decision on the factory floor – will no doubt be motivated to add an extra flavour of satisfaction to their delicious products.