Annual Leave now a cash cow?

Recently, the Fair Work Commission varied many awards with new or changed terms about taking annual leave. Most changes take effect from 29 July 2016. There are changes to rules about:

• cashing out annual leave;
• taking annual leave in advance;
• managing large (‘excessive’) annual leave balances; and
• payment for annual leave.

Many of these changes already exist in individual employment agreements, but many will be new to Awards, and will bring many Awards into line with what is becoming more common practice, while continuing to recognise the importance of annual leave for employees and employers alike.

Most awards now allow employees to cash out annual leave, if they:

• have at least 4 weeks annual leave left after the cash out,
• have a signed written agreement with their employer, and
• don’t cash out more than 2 weeks each 12 months.

Most awards now allow employees to take annual leave before they have accrued it if their employer agrees in writing. The agreement needs to:

• be signed by both the employer and the employee,
• say how much annual leave is being taken in advance, and
• say the day the leave will start.

The rules about what happens if an employee has accumulated an excessive annual leave balance have been changed in some awards. Excessive annual leave is when an employee has accumulated at least 8 weeks of leave (10 weeks for a shiftworker).

If an employee has an excessive annual leave balance and can’t agree with their employer on when to take it, the employer can:

• tell the employee, in writing, that they must take annual leave,
• give the employee at least 8 weeks notice (and not more than 12 months) of when the leave will start.

There are rules about how long the period of leave has to be and how much the employee has to have left afterwards.

Some awards have a new clause allowing employees with excessive annual leave balances to tell their employer that they will take a period of leave. This clause takes effect from 29 July 2017.

Until July 2017, employees who are covered by these awards and have large amounts of accrued annual leave should follow the normal process for requesting annual leave.

Some awards say that annual leave has to be paid before the employee starts their leave. A new clause has been added to these awards. Now, if an employee is paid by electronic funds transfer (EFT), they can continue to be paid using their usual pay cycle during periods of leave.

Make sure you keep up to date on the requirements of your particular Award, and if you are unsure or need further advice, contact Adam Foster (Associate, Business Law Practice Group) on 03 9629 9629 or by email at adamf@lewisholdway.com.au for assistance on all employment matters.