Annual leave accrual and administration - employer questions about WorkChoices

Q&A

Annual leave accrual and administration - employer questions about WorkChoices

Annual leave under WorkChoices needs careful attention. Here are some questions and answers addressing annual leave accrual while receiving workers compensation, failure to take annual leave and time of payment for annual leave.

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Annual leave under WorkChoices needs careful attention. Here are some questions and answers addressing annual leave accrual while receiving workers compensation, failure to take annual leave and time of payment for annual leave.

This is another in a series of articles on the most commonly asked questions by employers on aspects of the WorkChoices legislation. It is intended that this series will assist employers in understanding the complex issues raised by the new legislation and, in some instances, highlight areas that may require further legislative amendment or may be potentially areas of future legal challenge.

As with all articles with respect to WorkChoices the commentary is based on the presumption that the employer is a constitutional corporation, unless otherwise specified.

Workers compensation and accrual of leave

Q. We have an award-covered employee who wishes to take one week's annual leave. We pay our employees monthly two weeks in arrears and two weeks in advance. One of our employees insists on being paid their week's leave in advance. What is the situation now under WorkChoices?

A. Under WorkChoices, unless otherwise provided by the relevant workers' compensation legislation, an employee accrues annual leave during any absence on workers compensation, however, this would only apply to leave accrued and credited since 27 March 2006 (approximately five months at September 2006).

For service prior to this, the employer would need to look at the applicable award or State/Territory annual leave legislation to establish the employee's accrual.

Many pre-reform awards did not provide for the accrual of annual leave while an employee was absent due to personal illness or injury (including workers compensation), so this may affect the employee's accrual. Therefore, just because an employee has completed 12 months service does not necessarily mean the employee has an entitlement to four weeks' paid annual leave.

Failure to take annual leave

Q. We have an award-covered employee who wishes to take one week's annual leave. We pay our employees monthly two weeks in arrears and two weeks in advance. One of our employees insists on being paid their week's leave in advance. What is the situation now under WorkChoices?

A. Under the WorkChoices Standard annual leave is cumulative, meaning the employee does not lose any entitlement to accrued annual leave.

The employer can send an employee on annual leave if the employee has accrued an annual leave credit greater than he/she would ordinarily accrue over two years. In these circumstances, the employer may direct the employee to take up to one quarter of the accumulated annual leave credit. The taking of any additional annual leave credit is only permitted by mutual agreement between the parties.

Time of payment for annual leave

Q. We have an award-covered employee who wishes to take one week's annual leave. We pay our employees monthly two weeks in arrears and two weeks in advance. One of our employees insists on being paid their week's leave in advance. What is the situation now under WorkChoices?

A. The annual leave Standard under WorkChoices states that if an employee takes annual leave during a period, the leave must be paid immediately before the period begins. However, this would only apply to annual leave accrued subsequent to the introduction of WorkChoices and applies to an employee under a pre-reform Federal award, NAPSA, new workplace agreement, or a non-award employee.

Annual leave accrued prior to WorkChoices would be subject to the relevant source of the annual leave entitlement, ie applicable award or State/Territory legislation.

An employee covered by a pre-reform agreement is not affected by the WorkChoices Standard.

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