From the end of July 2016, the Fair Work Commission made changes
to a number of the Modern Awards, which varied the rules about
employees and annual leave.
The changes included new rules about cashing in annual leave,
taking leave in advance, payment for annual leave, and how
employers can manage employees with large leave balances.
If your employees wish to cash out their annual leave, or take
leave in advance, you can agree to these arrangements, provided
that you comply with the requirements under your relevant modern
award. In most cases, you must:
Have a written agreement regarding the leave to be cashed out
or taken in advance;
Ensure that the employee has at least 4 weeks leave remaining
after any agreed cash out of leave;
Not cash out more than two weeks of leave in every 12
If you are concerned that your employees are accumulating large
annual leave balances, you may also be able to direct your employee
to take leave, provided you comply with the relevant modern
Excessive annual leave is defined as more than 8 weeks of leave
( or 10 weeks for a shiftworker).
If you have an employee with "excessive" annual leave,
you should in the first instance discuss this with your employee
and attempt to come to an arrangement as to how and when they will
take their leave to reduce the balance. If you cannot come to an
agreement, you may be able to direct your employee to take leave,
provided you give them at lease 8 weeks notice in writing of when
you will require the leave to start. There are restrictions under
each modern award setting out what period of leave must be taken
and how much leave the employee must have left after being directed
to take leave.
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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We discuss the case of Heraud v Roy Morgan Research Limited ( FCCA 1797).
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