Major annual leave award changes kick off

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Major annual leave award changes kick off

Employers must now adhere to a Fair Work Commission decision that affects most modern awards in relation to cashing out annual leave, leave in advance and excessive leave balances.

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Employers must now adhere to a Fair Work Commission decision that affects most modern awards in relation to cashing out annual leave, leave in advance and excessive leave balances. 

These changes apply from the first pay period on or after 29 July 2016.

The award changes reflect model provisions that were handed down in September 2015.

There are changes to rules about:
  • cashing out annual leave
  • taking annual leave in advance
  • managing large ('excessive') annual leave balances
  • payment for annual leave.
Principal case – model clauses: WorkplaceInfo’s report on the model clauses that underpin the award changes is here

Summary of the changes


Most awards now allow employees to cash out annual leave, if they:
  • have at least 4 weeks annual leave left after the cash out
  • have a signed written agreement with their employer
  • don't cash out more than two weeks each 12 months.

Taking annual leave in advance


Most awards now allow employees to take annual leave before they have accrued it if their employer agrees in writing. The agreement needs to:
  • be signed by both the employer and the employee
  • say how much annual leave is being taken in advance
  • say the day the leave will start.

Managing excessive annual leave balances


The rules about what happens if an employee has accumulated an excessive annual leave balance have been changed in some awards. Excessive annual leave is when an employee has accumulated at least eight weeks of leave (10 weeks for a shiftworker).

Direction by employer


If an employee has an excessive annual leave balance and can't agree with an employer on when to take it, the employer can:
  • tell the employee, in writing, that they must take annual leave
  • give the employee at least eight weeks' notice (and not more than 12 months) of when the leave will start.
There are rules about how long the period of leave has to be and how much the employee has to have left afterwards. 

Notice by employee


Some awards have a new clause allowing employees with excessive annual leave balances to tell their employer they will take a period of leave. This clause takes effect from 29 July 2017.

Until July 2017, employees who are covered by these awards and have large amounts of accrued annual leave should follow the normal process for requesting annual leave.

Payment for annual leave


Some awards say that annual leave has to be paid before an employee starts leave. A new clause has been added to these awards. Now, if an employee is paid by electronic funds transfer (EFT), they can continue to be paid using their usual pay cycle during periods of leave.

Fair Work Commission decision


The Fair Work Commission will update the clauses in the awards that have been varied on the commission's site.

The case history is here

Awards excluded


As noted, most modern awards are affected by these changes, however these awards are excluded:
  • Dredging Industry Award 2010
  • Educational Services (Teachers) Award 2010
  • Higher Education Industry - Academic Staff - Award 2010
  • Higher Education Industry - General Staff - Award 2010
  • Marine Towage Award 2010
  • Maritime Offshore Oil and Gas Award 2010
  • Ports, Harbours and Enclosed Water Vessels Award 2010
  • Seagoing Industry Award 2010
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