In a recent ground-breaking decision, the Fair Work Commission has varied the terms relating to annual leave that appear in the majority of modern awards (being the instruments that set out minimum employment terms and conditions for millions of Australians). The most controversial variation being the ability to cash out annual leave.
Most awards now permit an employee, subject to first procuring the written agreement of their employer, to:
- cash out up to 2 weeks of the employee’s annual leave accrual in any 12 month period, so long as they the employee’s remaining annual leave accrual does not fall below 4 weeks; and
- take a period of annual leave in advance of the employee accruing the entitlement to proceed on leave.
The Fair Work Commission decision also has the effect of inserting into a number of modern awards:
- a mechanism to reduce excessive annual leave accruals; and
- provisions allowing an employer to pay an employee on annual leave via electronic funds transfer in accordance with their usual pay cycle, rather than prior to the employee taking annual leave.
A summary of the Fair Work Commission’s decision in relation to annual leave can be found here.