Modern Award Review 2014 - Annual Leave Latest News

26th May 2014

The Fair Work Commission’s Four Yearly Review of Modern Awards has moved onto the issue of Annual leave. As was experienced in the transitional review of modern awards last year, there is considerable interest from employers in reforming the currently inefficient arrangements for taking, paying and cashing out annual leave. In particular, employers are seeking reforms to ensure:

• opportunities to cash out some accrued annual leave rather than taking it;
• reinstating the power of employers to direct employees to take annual leave;
• clarifying arrangements for taking leave during yearly close-down periods;
• re-establishing power to approve annual leave in advance of it accruing; and
• ensuring employers can continue to pay annual leave via electronic funds transfer during the normal pay cycle.

The Fair Work Commission has been reluctant to accommodate these very simple measures to properly modernise annual leave arrangements in Australian workplaces. Whilst many businesses operate enterprise agreements allowing employees to cash in some of their accrued annual leave and where this is freely available to employees not covered by an award, the Commission refused to incorporate a term in modern awards at the last review. It has also steadfastly refused to reinstate the power once held by employers to direct employees when to take annual leave. The National Employment Standards require annual leave to be taken at a time agreed between the employer and employee. However it does not provide a mechanism to direct employees to take leave meaning employees can accumulate large balances of annual leave and therefore large liabilities for employers. An award term establishing a mechanism to direct employees to take excessive amounts of accrued leave would solve the problem.

The Fair Work Commission is now required to consider the merit of amending all modern awards to address these and other issues in regard to annual leave. The Australian Chamber of Commerce and Industry has developed draft terms of clauses it and other employers want incorporated into the modern awards. The Commission will hear evidence for and against the proposed amendments over the coming months.

Go to the submission from the ACCI to see the proposed terms and the awards that would be covered if the submission is accepted by the Commission.