As we approach the last quarter of the year, your staff will commence their holiday planning if they haven’t already done so. It’s a timely reminder that in 2016,  Annual Leave clauses in Awards were amended. 

Some employers often think that because they pay above Award pay rates, their staff are not covered by Award terms. This is not so and the terms of Awards do form a minimum standard.

The changes were designed to provide employers with flexibility in managing leave arrangements and preventing cash flow issues with excessive accumulated annual leave balances. The changes specifically deal with:

Managing excessive accrual of annual leave which is defined as more than 8 weeks' paid annual leave (10 weeks for shift workers). Employers may direct their employees with excessive annual leave to take leave, provided that: 

  1. Employers meet with employees and try to reach an agreement to reduce or eliminate excessive annual leave amounts. 
  2. The remaining annual leave entitlement is not less than 6 weeks.
  3. The directed leave is no less than 1 week.
  4. 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 provide the choice to pay annual leave as part of an employee’s ordinary pay cycle.

Cashing out annual leave is now permitted provided that:

  1. 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 is required)
  2. The amount paid to the employee must be equal to the full amount they would have received had they taken the annual leave.
  3. 2 weeks in any 12 month period is the maximum amount that can be cashed out.
  4. 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.

Should you have any questions on how to manage leave arrangements in 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. 

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