Australia: Leading firm urges greater awareness of significant changes to annual leave provisions now in force

Last Updated: 17 October 2016
Article by Peter Doughman

"Important changes to annual leave rules for Award covered employees recently made by the Fair Work Commission will have significant impacts on employers with most of these new rules already in effect, however a leading firm believes many may not yet be aware of the changes.

"The changes introduced by the Fair Work Commission (FWC) include new arrangements for requesting and taking annual leave, for cashing out annual leave, and for reducing excessive leave accruals. In some cases the changes affect as many as 112 out of a total of 122 modern awards.

"Employment lawyers should ensure their employer clients are aware of these important changes, particularly as most of the changes started on 29 July 2016.

The problem of accumulating annual leave balances

"Four weeks annual leave has been enshrined in Australian employment law for many years, as is the right to be paid upon termination of employment the monetary value of all untaken leave at the rate of pay when the employment ends.

"We all recognise that annual leave exists for employees to have time out from work, at least yearly, and that is clearly in the interests of both employees and employers. But there are some collateral problems, particularly for employers, if such leave is not taken regularly."

"Large accumulations of annual leave by employees can create substantial financial liabilities for employers when employment ends, and employers are likely to pay out a lot more than if the employee had taken leave as and when it fell due. Leave accumulates for a range of reasons – sometimes employees only want to take leave at the same time as their partner; others are approaching retirement and want to build up a nest egg; some are "work junkies"; and sometimes the employer does not have the staff cover to release employees on leave.

"The new changes to most Modern Awards will assist employers to deal with this problem, if they are prepared to take up the opportunity. It will also allow award regulated employees to cash out part of their annual leave accumulation (a benefit only previously available to award free employees and those employees covered by an enterprise agreement with cashing out provisions).

"The key initiatives that Employers and their advisors need to be aware of in relation to the new award measures that address problem of accumulating annual leave balances are these.

Cashing out annual leave

"FWC has varied 112 of the 122 modern awards to permit and regulate the cashing out of accrued and untaken paid annual leave by agreement of employer and employee. Any agreement to cash out annual leave must:

  • be for each individual occasion of cashing out
  • be in writing signed by the employer and employee
  • state the amount of leave to be cashed out and the payment to be made to the employee
  • state the date when the payment is to be made to the employee
  • be no more than the cash equivalent of two weeks' annual leave in any twelve month period; and
  • not result in an employee's accrued annual leave entitlement falling below four weeks.
  • "The employer must keep a copy of each such agreement as part of its employment records.

Excessive leave accruals and directions or notice to take leave

"The FWC has varied 80 of the 122 modern awards in order to insert the "excessive annual leave" model term that defines an excessive leave accrual as being in excess of eight weeks (or ten weeks for a shift worker). The model term provides that where an employer and employee cannot agree on how to reduce or eliminate an excessive annual leave accrual, either the employer may direct the employee to take, or the employee may give a notice requesting to take, one or more periods of paid annual leave.

"In either case, the direction given by the employer or the notice given by the employee:

  • must not result in the remaining annual leave being less than six weeks when any other leave arrangements are taken into account; and
  • must not involve the use of annual leave for a period shorter than one week.

"Further, the period of annual leave must not commence less than 8 weeks or more than 12 months after the direction by the employer or notice by the employee is given.

"In the case of an employee's notice to take paid annual leave, the notice can only be given if the employee has had an excessive leave annual accrual for more than six months, and has not been subject to a prior direction by the employer to reduce the excessive annual leave accrual. The model term provides that where an employee issues a notice to an employee consistent with its provisions, the employer must grant the employee's request for paid annual leave.

"Unlike the other variations to the modern awards, the model term permitting an employee to give notice to an employer to take paid annual leave will not take effect in any of the many affected awards until 29 July 2017.

"These national level award changes are potentially very significant in that they apply to the overwhelming bulk of award regulated employees and provide the means whereby the problem of excessive annual leave balances can be addressed, particularly by employers, over time", said Mr Doughman.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.