As part of the four yearly review of modern awards, the
Fair Work Commission Full Bench (FWCFB) has decided to vary the
annual leave provisions in the majority of modern awards in respect
of the following matters:
cashing out annual leave;
excessive annual leave accruals;
granting annual leave in advance; and
payment of annual leave during leave
Cashing out annual leave
Award covered employees can only cash out annual leave if the
relevant award allows for it. The majority of the modern awards
will be varied to include a model term that allows employees to
cash out some of their annual leave, with certain conditions. The
A maximum of two weeks of annual leave can be cashed out every
The employer and employee must enter into a separate written
agreement containing specific provisions about the cashing out of
The employee must have an entitlement to at least four weeks of
paid annual leave remaining after the leave is cashed out.
The only awards excluded from this amendment are those in the
maritime industry and the Security Services Industry Award
2010. All other modern awards will include this amendment.
Excessive annual leave accruals
83 modern awards will be varied to include a model term that
deals with excessive annual leave accruals. An employee has an
excessive annual leave accrual if they have more than eight weeks
of accrued annual leave (or 10 weeks for a shift worker).
Subject to certain conditions, if an employee has an excessive
annual leave accrual, employers will have the right to direct
employees to take annual leave and employees will have the right to
require an employer to grant a period of annual leave.
The FWCFB will continue to consider whether to include the
provisions in the remaining modern awards.
Granting annual leave in advance
Modern awards will be varied to include a model term that allows
an employer and employee to agree, in writing, for the employee to
take paid annual leave in advance of it accruing. If the employee
has not accrued enough annual leave to make up the deficit by the
time their employment ends, the employer is then entitled to make
equivalent deductions from the employee's termination payments.
Some modern awards already include a similar provision.
Payment of annual leave during leave
There are currently 51 modern awards that require an employer to
pay an employee for annual leave in advance of the employee taking
the leave. These modern awards will be varied to allow the employer
to pay the employee while they are on annual leave in accordance
with the usual pay cycle if they are paid by electronic funds
Annual leave provisions not varied
The FWCFB also considered making variations to the annual leave
provisions in all awards in relation to an annual close down
period, purchased annual leave and payment of annual leave
entitlements on termination. The FWCFB decided, for various reasons
not to vary the modern awards in respect to these matters.
The date for the implementation of the above amendments is yet
to be determined.
The amendments will apply to most modern awards, however they do
not apply to all of them. It is important to check the relevant
modern award before implementing any of the above changes.
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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