The Fair Work Commission changes to the annual leave provisions in each Modern Award – below is a summary of those changes:

Cashing Out Annual Leave

Under the current law, an employee covered under a Modern Award can only cash out their annual leave if that Award allows them to do so. There is currently only one Award that allows employees to cash out their annual leave.

Award-free and agreement-free employees are currently permitted to cash out their annual leave, provided that no less than 4 weeks’ of accrued annual leave is retained.

Under the proposed changes, employees would be able to cash out a maximum of two (2) weeks’ annual leave in each 12 month period. There will also be safeguards in place for employees under 18 years of age, and a reminder that employees cannot be pressured / deceived into cashing out their annual leave.

Excessive Annual Leave

Under the proposed changes, ‘excessive annual leave accrural’ will be deemed as 8 weeks for non-shiftworkers, and 10 weeks for shiftworkers.

If an employer and an employee cannot agree on how and when the annual leave is to be taken, the employer will have the power to direct an employee to take a period (or periods) of annual leave.

Taking Annual Leave In Advance

Under the proposed changes, annual leave will be able to be taken in advance of it actually being accrued.

An employer will also be permitted to make a deduction from an employee’s termination pay if the employment ends and the employee has ‘negative’ leave accrued.

When annual leave pay is to be paid

Currently, 51 Modern Awards require an employer to pay an employee annual leave pay before the employee takes annual leave.

Under the changes, an employer will be permitted to pay annual leave as part of an employee’s ordinary pay cycle.