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

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

Similar Articles
Relevancy Powered by MondaqAI
PCC Employment Lawyers
PCC Employment Lawyers
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”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
PCC Employment Lawyers
PCC Employment Lawyers
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions