Cashing Out Annual Leave Now OK for Award Employees

7th August 2016

The Fair Work Commission decision to allow award covered employees to ‘cash-out’ some of their annual leave has finally been implemented. All awards are being varied.

The final schedule of determinations to vary modern awards allowing cashing out of annual leave, arrangements for taking excessive accrued annual leave and leave in advance are operative from the pay period commencing on or immediately after 29 July 2016.

Employers may now offer employees covered by a modern award an opportunity to ‘cash out’ a maximum of 2 weeks annual leave each year as long as the employee retains at least 4 weeks leave.

Individual agreements to cash out annual leave must be in writing on each ocassion it occurs, signed and dated by the employee and employer.

Employees must be paid the amount they would have received if the leave had been taken. Therefore payment must include annual leave loading if prescribed by the award.

Directions to take ‘excessive accrued annual leave’ are subject to genuine attempts to reach agreement with the employee and the amount of excessive leave directed to be taken cannot reduce the amount of accrued leave to less than 6 weeks.

The varied clause includes a reciprocal right for employees to request to take excessive annual leave. This new right commences in twelve months on 29 July 2017. The right to request is subject to the same consultative requirements imposed on employers wishing to direct employees to take leave.

If you would like further information or guidance specific to your business in implementing the the new arrangements please contact me.

Employee Relations Online subscribers can access fact sheets explaining the varied award clause as well as a variety of leave, pay and award information to manage the daily relationships with staff.