New Changes to Annual Leave Rules| Fairwork Online

New Changes to Annual Leave Rules

On 29 July 2016, the Commission made changes to most Modern Awards regarding the following rules:

1.  Cashing out annual leave

2.  Taking annual leave in advance

3.  Managing 'excessive' annual leave balances

4.  Payment for annual leave


Cashing out annual leave

Most Modern Awards now allow employees to cash out annual leave, provided that the employee:

  • has at least 4 weeks of annual leave remaining after the 'cash out'; and
  • has a signed written agreement with their employer; and
  • does not cash out more than 2 weeks of annual leave in each 12 month period.


Taking annual leave in advance

Most Modern Awards now allow employees to take annual leave before they have accrued the leave if their employer agrees to this in writing. The written agreement needs to:

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


Managing excessive annual leave balances

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

Direction by employer - If an employee has an excessive annual leave balance, and he or she cannot agree with their employer on when to take it, the employer can:

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

There are rules about how long the period of leave has to be and how much the annual leave must be remaining afterwards. 

Notice by employee - Some Modern 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 Modern Awards and have large amounts of accrued annual leave should follow the normal process for requesting annual leave.


Payment for annual leave

Some Modern Awards now provide that annual leave is to be paid BEFORE the employee starts their leave, and a new clause has been added to these Modern Awards.  However, 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.


To find out which of the above new rules apply to the Modern Award(s) that cover your business / organisation, CLICK HERE.


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