Annual Leave Changes
As part of the Fair Work Commission’s four-yearly review of Modern Awards, Awards have now been amended to include new rules on cashing out annual leave and directions for employers to address those staff with excessive annual leave balances.
The changes are designed to provide employers with flexibility in managing leave arrangements and prevent cash flow issues with excessive accumulated annual leave. The changes specifically deal with:
- Managing excessive annual leave which is defined as more than 8 weeks' paid annual leave (10 weeks for shift workers). The new provisions will allow employers to direct their employees with excessive annual leave to take leave, provided that:
a) Employers meet with employees and try to reach an agreement to reduce or eliminate excessive annual leave amounts.
b) The remaining annual leave entitlement is not less than 6 weeks.
c) The directed leave is no less than 1 week.
d) Employers give 8 weeks’ notice of the directed leave - Payment of annual leave. Many awards required annual leave to be paid in advance of leave commencing. Changes to Awards now provides the choice to pay annual leave as part of an employee’s ordinary pay cycle.
- Cashing out annual leave is now permitted provided that:
a) There is a written agreement between the employee and employer for each cashing out. (for employee’s under 18 years of age a parent/ guardian signature id required)
b) The amount paid to the employee must be equal to the full amount they would have received had they taken the annual leave.
c) 2 weeks in any 12 month period is the maximum amount that can be cashed out.
d) The employee must retain a minimum balance of 4 weeks accrued annual leave. - Taking annual leave in advance. Most modern awards now allow this. However, an agreement must be signed by both the employer and the employee stating the amount of annual leave being taken and specifying the dates of the leave.
Now is the time to check the changes in the awards relevant to your Company and to update your Annual Leave policies and procedures.
Should you have any questions on how these changes affect your business please contact us. Subscribers to Your HRdocs can download an updated Annual Leave Template Policy as well as Agreements for Cashing out Annual Leave and for Taking Annual Leave in Advance.