On the 29th of July The Fair Work Commission (FWC) put into effect some important changes to annual leave terms.  The changes, which aim to create more flexibility for employers and employees alike, cover cashing out of annual leave, taking annual leave in advance and managing excessive annual leave balances across most modern awards. You can check whether the changes will affect you here https://www.fairwork.gov.au/leave/annual-leave/payment-for-annual-leave.

With these new annual leave terms in effect, now is a great time to review your current policies and procedures. The key changes are listed below.

Cashing out annual leave

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
  • Don’t cash out more than 2 weeks each 12 months.

Taking annual leave in advance

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
  • Say the day the leave will start.

Managing excessive annual leave balances

If an employee has an excessive annual leave balance (8 weeks or more) 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.

The Council of Small Business Australia reviewed the new terms and believes that businesses should be able to negotiate with their employees to come up with a fair outcome.

Payment for 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 which mean employees can continue to be paid using their usual pay cycle during periods of leave if paid by EFT.

Additional important points to note with new changes:

  • Employers must maintain arrangements already agreed to with employees, keeping consistent direction.
  • Employees can request annual leave despite prior direction and arrangements
  • Employees with excessive leave for over 6 months can take some of their leave, even if the employer has not issued direction for the leave

This information has been taken from fairwork.gov.au, for further information head to their media release on the changes: https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/changes-to-annual-leave-in-some-awards