Annual leave & the Workplace Relations Bill

Analysis

Annual leave & the Workplace Relations Bill

WorkplaceInfo continues to analyse the new federal IR legislation on a topic by topic basis. One condition of employment that looks different in the light of the Workplace Relations Amendment (Work Choices) Bill 2005 is annual leave when compared to what the Government had indicated in its previews of the legislation.

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WorkplaceInfo continues to analyse the new federal IR legislation on a topic by topic basis. One condition of employment that looks different in the light of the Workplace Relations Amendment (Work Choices) Bill 2005 is annual leave when compared to what the Government had indicated in its previews of the legislation.

A previous article on WorkplaceInfo summarised the annual leave amendments under the Federal Government's proposed workplace relations legislation. The Workplace Relations (Work Choices) Amendment Bill 2005 has been introduced to Parliament, providing greater detail on the minimum conditions with respect to the minimum annual leave conditions under the proposed new system.

Overview of proposed legislation

The proposed legislation provides for guaranteed annual leave conditions for all employees throughout Australia (except casual employees), including those employees currently covered by a state award or agreement, and employees who are not covered by an industrial instrument, eg. management, professional occupations, etc.

'More generous' provisions continue

Current state or territory annual leave legislation will continue to apply where a particular annual leave condition is deemed to be 'more generous' than the guaranteed federal annual leave standard.

Cashing out

However, to receive a cashing out of annual leave, an employee can only do so through a federal collective agreement or an Australian Workplace Agreement (AWA).

Commencement date

All guaranteed annual leave conditions will only apply when the Bill becomes law. In the case of employees covered by a state award or agreement, or a non-industrial instrument employee, the 'more generous' conditions will apply, initially, for a three year period. At this stage it is unclear as to the application of these 'more generous' provisions once the three year period has elapsed. The commencement date of the proposed legislation has yet to be determined.

Entitlement - amount of leave

Under the Bill, an employee is entitled to accrue an amount of paid annual leave, for each completed 4 week period of continuous service with an employer, of 1/13 of the nominal hours worked by the employee during that 4 week period. For example, an employee whose nominal hours worked for a 12 month period were 38 hours per week would be entitled to 152 hours of annual leave (the equivalent of 4 weeks annual leave if the nominal hours worked remained unchanged).

Shift workers

An employee is also entitled to accrue an amount of paid annual leave, for each completed 12 month period of continuous service with an employer, of 1/52 of the number of nominal hours worked by the employee, as a shift worker during that 12 month period.

A 'shift worker' is defined as an employee who is employed in a business in which shifts are continuously rostered 24 hours a day for 7 days a week, and is regularly rostered to work those shifts, and regularly works on a Sunday or public holiday.

For example, an employee whose nominal hours over the 12 month period were 38 per week, and who worked as a shift worker throughout that period, would be entitled to an additional 38 hours of annual leave (the equivalent of one week of annual leave if the nominal hours worked remained unchanged).

Cashing out annual leave

An employee is entitled to forego an entitlement to annual leave if:

  • a provision in a workplace agreement binding the parties entitles the employee to forego the entitlement to annual leave; and

  • the employee gives the employer a written election to forego the amount of annual leave; and

  • a provision in a workplace agreement binding on the parties entitles the employee to receive pay in lieu of annual leave at a rate no less than the employee's basic periodic rate of pay at the time the election is made; and

  • the employer authorises the employee to forego the amount of annual leave.

Limit on leave cashed out

During the course of the year, an employee is not entitled to forego annual leave that is equal to more than 1/26 (ie. 2 weeks over a twelve month period) of the nominal hours worked during the period. An employer must not:

  • require an employee to forego an entitlement to take an amount of annual leave; or

  • exert undue influence or undue pressure on an employee in relation to the making of a decision by the employee whether or not to forego an entitlement to take an amount of annual leave.

AWAs and cashing out

It is presumed that, as is currently the case, and employer and an individual employee may negotiate an AWA allowing the cashing out of annual leave in a particular instance, and need not necessarily be an ongoing condition of employment.

Accrual of annual leave

Annual leave will accrue on a pro rata basis. Each month an employer must credit to an employee the amount (if any) of annual leave accrued by the employee. Annual leave is cumulative.

Payment of annual leave

If an employee takes annual leave, it must be paid at a rate that is no less than the employee's basic periodic rate of pay immediately before the period begins. This means that where an employee's rate of pay increases during a period of annual leave, no adjustment to payment would be necessary upon the employee's return to work after the leave.

Where the employment is terminated by either party, the untaken annual leave is paid at the employee's basic periodic rate of pay at the time of termination.

Taking of annual leave

General rules: There is no maximum or minimum limit on the amount of annual leave that an employer may authorise an employee to take. Any authorisation given by an employer enabling an employee to take annual leave during a particular period is subject to the operational requirements of the workplace or enterprise in respect of which the employee is employed.

An employer must not unreasonably refuse to authorise an employee to take an amount of annual leave that is credited to the employee, or revoke an authorisation enabling an employee to take annual leave during a particular period.

Shut downs: An employee must take an amount of annual leave during a particular period if the employee is directed to do so by the employee's employer because, during that period, the employer shuts down the business, or any part of the business, in which the employee works; and at least that amount of annual leave is credited to the employee.

Extensive accumulated annual leave: An employee must take an amount of annual leave during a particular period if:

  • the employee is directed to do so by his or her employer; and

  • at the time the direction is given, the employee has annual leave credited to him or her of more than 1/13 of the number of nominal hours worked by the employee for the employer during the period of 104 weeks ending at the time that the direction is given; and

  • the amount of annual leave that the employee is directed to take is less than, or equal to, 1/4 of the amount of credited annual leave of the employee at the time that the direction is given.

State awards & agreements

The federal guaranteed annual leave conditions will apply to state awards and agreements awards and agreements, except where a particular annual leave provision under a current state award or agreement is 'more generous' than the federal minimum standard.

Anomalies will occur during the transitional period where a previous state award or agreement provides certain annual leave conditions which are greater than prescribed by the proposed federal legislation.

For example, NSW state awards and agreements are generally subject to the provisions of the Annual Holidays Act [NSW], which provides for 1/12 (as opposed to the federal bill's 1/13) on termination of employment. Under the proposed federal legislation, the more generous provision will apply.

The definition of the term 'more generous' has not been defined, although Regulations are expected to clarify this issue.

Non-industrial instrument employees


As previously mentioned, the minimum annual leave conditions provided under the Bill apply to all employees, other than casual employees, throughout Australia.

Employees who are not currently covered under an industrial instrument are referred to as being employed under a 'nominal agreement'. This means that such an employee's annual leave conditions will be determined by the guaranteed federal annual leave standard and, where relevant, the more generous state or territory provision. This is expected to be the situation for three years.

Related

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Entry page to current annual leave conditions
 

 

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