New Changes to Annual Leave Rules

August 17 2016  by Noé Vicca - Principal

Employers please take note, on 29 July 2016, the Fair Work Commission made changes to most Modern Awards and altered the rules relative to annual leave matters:

1.  Cashing out annual leave

2.  Taking annual leave in advance

3.  Managing 'excessive' annual leave balances

4.  Payment for annual leave 

Cashing out Annual Leave

Per above most Modern Awards will now allow employees to cash out annual leave, provided that the employee:

  • has at least 4 weeks of annual leave remaining (that is after the 'cash out has occurred); and
  • has executed a written agreement with their employer; and
  • does not cash out more than 2 weeks of annual leave form any 12 month period.

Taking Annual Leave in Advance

Per above most Modern Awards now allow employees to take annual leave albeit there may be no accrued leave in hand. This is conditional on both the employer and employee agreeing to the same in writing. The agreement must contain the following minimal points:

  • be signed by both the employer and the employee;
  • confirm the amount of annual leave being taken in advance;
  • set out the date the leave will start.

 Managing High Annual Leave balances

Where an employee has accumulated an inordinately high/excessive annual leave balance, Excessive annual leave being deemed to occur when an employee has accumulated at least 8 weeks' of leave, new rules may apply.

If an employee has an excessive annual leave balance, and the employer and employee cannot agree as to when the employee must/should take/use their annual leave, the employer can:

  • write to the employee, advising then that they must take annual leave; and
  • provide the employee at least 8 weeks' notice of when the leave will start.

There new rules appear to be silent as to how long the period of leave has to be and/or as to how much of the annual leave must can remain untaken thereafter. 

Payment for Annual Leave

Where an employee is paid by electronic funds transfer (EFT), they can continue to be paid using their usual pay cycle during periods of leave.

For further information contact This email address is being protected from spambots. You need JavaScript enabled to view it.">This email address is being protected from spambots. You need JavaScript enabled to view it.


Disclaimer: The contents herein are intended for general information only and should not be construed as legal or accounting advice. Vicca Chartered Accountants Brisbane bears no responsibility for any loss that might occur from reliance on information contained in this publication. Please do not reproduce, transmit or distribute the contents herein in any form without prior permission from Vicca Chartered Accountants, Taxation Accountants Brisbane Australia.

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