Fair Work decision on changes to paid annual leave

Jun 2, 2015 | LBW News

Ange Jones

The Fair Work Commission has agreed to a request from employers to add a provision regarding paid annual leave to all Modern Awards for greater flexibility. This decision has come as part of a four yearly review of Modern Awards.

What are the key changes?

A provision will be inserted to allow the cashing out of annual leave and terms added for an employer to direct employees to take “excessive leave”.

What is excessive leave?

The Full Bench agreed to include of a provision allowing an employer to direct an employee to take “excessive leave” where:

  • The leave accrued is at least 8 weeks for non-shift workers and 10 weeks for shift workers;
  • The direction to take the leave will not result in the employee’s annual leave balance dropping below 6 weeks; and
  • The employer has attempted to reach an agreement on a plan to reduce the excess leave before making a direction

To increase flexibility the clause relating to excessive leave will seek to recognise individual circumstances where an employee may accrue excess leave with no direction to take it.

What are the conditions around cashing out of annual leave?

The provision to allow an employee to cash out their annual leave will exist where:

  • A maximum of two weeks annual leave is cashed out in a 12 month period (pro-rata for part time employees);
  • The employee retains at least four weeks of annual leave after they have cashed out a portion of their leave;
  • The employee must be paid at the least the equivalent amount they would have been paid had they taken the leave, at the time it is cashed in;
  • There is a written agreement to cash out the annual leave; and
  • If the employee is under 18 years of age the agreement must be signed by the employee’s parent or guardian

When is the changing happening?

The Fair Work Commission will now receive submissions on the clauses referred to above and will draft them as appropriate to each Modern Award.

If you are unsure of which Modern Award applies to your business go to the Fair Work Ombudsman’s Award Finder http://awardfinder.fwo.gov.au/ .

For more information about changes to Modern Awards see the Fair Work Commission’s website https://www.fwc.gov.au/awards-and-agreements/modern-award-reviews or contract the Fair Work Ombudsman’s office on ph# 13 13 94 between 8am to 5.30pm Monday to Friday

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