‘Cashing Out’ Annual Leave and Other Changes to Workplace Awards
The Fair Work Commission (FWC) has recently updated 112 modern workplace awards with changes to annual leave terms. Employees covered by most Australian workplace awards now have the options to ‘cash out’ some of their annual leave and to take annual leave in advance. Some workplace agreements have also been revised to give employers greater powers to deal with excessive annual leave balances.
DO THE CHANGES AFFECT YOU?
If you are an employee covered by an Australian workplace award, or if your employees are covered by an award, the recent changes by the FWC regarding annual leave terms may affect you.
Workplace awards are enforceable documents, made and varied by the FWC, which set out minimum pay rates and employment conditions for entire industries or occupations. There are 122 industry and occupation awards that cover most people working in Australia.
The award(s) that apply to employees depends on the industry they work in or the job that they do. You can visit the FWC website to find out what award you may be covered by: https://www.fairwork.gov.au/awards-and-agreements/awards.
Most of the changes take effect from 29 July 2016.
If a business has an enterprise or registered agreement and an employee is covered by it, the employee will not be covered by an award and the recent FWC changes will not apply to them.
WHAT HAS CHANGED?
The rules about cashing out annual leave, taking annual leave in advance, managing large annual leave balances, and payment for annual leave have been changed in most awards. We have provided an overview of key changes below:
- Cashing out annual leave: Employees are now allowed, by a signed written agreement with their employer, to cash out a maximum of two weeks annual leave every 12 months, as long as they have at least 4 weeks annual leave left after the cash out.
- Taking annual leave in advance: Employees are also now allowed to make a signed written agreement with their employer to take annual leave before they have accrued it. The written agreement must include the amount of leave taken and the day the leave will start.
- Managing excessive annual leave balances: When an employee has accumulated at least eight weeks (‘excessive’) annual leave, and an agreement cannot be reached between the employee and employer on when to take it:
- employers will be able to tell the employees, in writing and with at least eight weeks’ notice, that they must take annual leave; and
- employees will be allowed to tell their employer, by written notice, that they will take a period of leave.
The changes dealing with excessive annual leave will only take effect from 29 July 2017.
- Payment for annual leave: Awards that previously provided that annual leave has to be paid before the employee starts their leave have now been updated so that employees who are usually paid by EFT can continue to be paid during their leave using their usual pay cycle.
WHAT TO DO NOW?
Not all workplace awards have been updated, and not all the changes apply to all of the awards. If you are covered by an award, or if your employees are covered by an award, you can find out whether the changes apply to you at www.fairwork.gov.au.
If you would like further advice regarding the workplace awards or agreements that affect you, or if you are faced with a workplace issue and require trusted legal advice to resolve the matter quickly, the team at Lynn & Brown Lawyers can help you. We can provide expert legal advice to both employees and employers.
About the authors:
This article has been co-authored by Claudia Giovannini and Steven Brown at Lynn & Brown Lawyers. Claudia is currently studying law at UWA and hopes to be admitted as a Perth lawyer in or about 2018. Haley has a keen interest in is family law and estates. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.