Fair Work Commission

Introduction

Under the National Employment Standards (NES) all employees covered by the national workplace relations system other than casual employees are entitled to a minimum of four weeks’ paid annual leave each year, or five weeks’ for certain shiftworkers^[1].

Annual leave accrues progressively during the year according to an employee’s ordinary hours of work.

Following recent decisions of the Fair Work Commission, most modern awards now allow employees to whom they apply, to cash out annual leave in certain circumstances.

How does it work?

Under the new cashing out of annual leave clause now included in most awards, an employee may cash out a particular amount of accrued paid annual leave if the following conditions are met:

• the employer and employee agree in writing to the cashing out
• the payment made to the employee must not be less than the amount that would have been payable had the employee taken the leave at the time the payment is made
• the agreement to cash out annual leave must not result in the employee’s remaining paid annual leave balance being less than four weeks, and
• the maximum amount of annual leave that may be cashed out in any period of 12 months is two weeks.

Each cashing out of a particular amount of paid annual leave must be the subject of a separate written agreement. The written agreement must:

• state the amount of leave to be cashed out and the payment to be made to the employee for it
• state the date on which the payment is to be made, and
• be signed by the employer and employee and, if the employee is under 18 years of age, by the employee’s parent or guardian.

The employer must keep a copy of the written agreement as an employee record.

Can cashing out of annual leave clauses be included in enterprise agreements?

Enterprise agreements may already contain cashing out of annual leave clauses.

Parties negotiating new enterprise agreements should be aware of the cashing out of annual leave clauses in modern awards as they may be relevant to the better off overall test.

Further information

The Fair Work Commission has developed a template agreement to cash out annual leave to assist employers and employees.

There is no requirement to use the Fair Work Commission’s template, but by using this template the employer will meet the requirements under the award for the written agreement.

Further information about the NES, in particular annual leave entitlements, can be found at www.fairwork.gov.au and in the Fair Work Ombudsman’s Annual leave fact sheet and National Employment Standards fact sheet.

Modern awards containing the new cashing out annual leave clause

• Aboriginal Community Controlled Health Services Award 2020
• Aged Care Award 2010
• Air Pilots Award 2020
• Aircraft Cabin Crew Award 2020
• Airline Operations – Ground Staff Award 2020
• Airport Employees Award 2020
• Alpine Resorts Award 2020
• Aluminium Industry Award 2020
• Ambulance and Patient Transport Industry Award 2020
• Amusement, Events and Recreation Award 2020
• Animal Care and Veterinary Services Award 2020
• Aquaculture Industry Award 2020
• Architects Award 2020
• Asphalt Industry Award 2020
• Banking, Finance and Insurance Award 2020
• Black Coal Mining Industry Award 2010
• Book Industry Award 2020
• Broadcasting and Recorded Entertainment Award 2020
• Building and Construction General On-site Award 2020
• Business Equipment Award 2020
• Car Parking Award 2020
• Cement, Lime and Quarrying Award 2020
• Cemetery Industry Award 2020
• Children’s Services Award 2010
• Cleaning Services Award 2020
• Clerks – Private Sector Award 2020
• Coal Export Terminals Award 2020
• Commercial Sales Award 2020
• Concrete Products Award 2020
• Contract Call Centre Award 2020
• Corrections and Detention (Private Sector) Award 2020
• Cotton Ginning Award 2020
• Dredging Industry Award 2020
• Dry Cleaning and Laundry Industry Award 2020
• Educational Services (Post-Secondary Education) Award 2020
• Educational Services (Schools) General Staff Award 2020
• Electrical Power Industry Award 2020
• Electrical, Electronic and Communications Contracting Award 2020
• Fast Food Industry Award 2010
• Fire Fighting Industry Award 2020
• Fitness Industry Award 2020
• Food, Beverage and Tobacco Manufacturing Award 2020
• Funeral Industry Award 2020
• Gardening and Landscaping Services Award 2020
• Gas Industry Award 2020
• General Retail Industry Award 2020
• Graphic Arts, Printing and Publishing Award 2020
• Hair and Beauty Industry Award 2010
• Health Professionals and Support Services Award 2020
• Horse and Greyhound Training Award 2020
• Horticulture Award 2020
• Hospitality Industry (General) Award 2020
• Hydrocarbons Field Geologists Award 2020
• Hydrocarbons Industry (Upstream) Award 2020
• Joinery and Building Trades Award 2020
• Journalists Published Media Award 2020
• Labour Market Assistance Industry Award 2020
• Legal Services Award 2020
• Live Performance Award 2020
• Local Government Industry Award 2020
• Mannequins and Models Award 2020
• Manufacturing and Associated Industries and Occupations Award 2020
• Marine Tourism and Charter Vessels Award 2020
• Marine Towage Award 2020
• Maritime Offshore Oil and Gas Award 2020
• Market and Social Research Award 2020
• Meat Industry Award 2020
• Medical Practitioners Award 2020
• Mining Industry Award 2020
• Miscellaneous Award 2020
• Mobile Crane Hiring Award 2020
• Nursery Award 2020
• Nurses Award 2020
• Oil Refining and Manufacturing Award 2020
• Passenger Vehicle Transportation Award 2020
• Pastoral Award 2020
• Pest Control Industry Award 2020
• Pharmaceutical Industry Award 2020
• Pharmacy Industry Award 2020
• Plumbing and Fire Sprinklers Award 2020
• Port Authorities Award 2020
• Ports, Harbours and Enclosed Water Vessels Award 2020
• Poultry Processing Award 2020
• Premixed Concrete Award 2020
• Professional Diving Industry (Industrial) Award 2020
• Professional Diving Industry (Recreational) Award 2020
• Professional Employees Award 2020
• Racing Clubs Events Award 2020
• Racing Industry Ground Maintenance Award 2020
• Rail Industry Award 2020
• Real Estate Industry Award 2020
• Registered and Licensed Clubs Award 2020
• Restaurant Industry Award 2020
• Road Transport (Long Distance Operations) Award 2020
• Road Transport and Distribution Award 2020
• Salt Industry Award 2020
• Seafood Processing Award 2020
• Seagoing Industry Award 2020
• Security Services Industry Award 2020
• Silviculture Award 2020
• Social, Community, Home Care and Disability Services Industry Award 2010
• Sporting Organisations Award 2020
• State Government Agencies Award 2020
• Stevedoring Industry Award 2020
• Storage Services and Wholesale Award 2020
• Sugar Industry Award 2020
• Supported Employment Services Award 2020
• Surveying Award 2020
• Telecommunications Services Award 2020
• Textile, Clothing, Footwear and Associated Industries Award 2020
• Timber Industry Award 2020
• Transport (Cash in Transit) Award 2020
• Travelling Shows Award 2020
• Vehicle Repair, Services and Retail Award 2020
• Waste Management Award 2020
• Water Industry Award 2020
• Wine Industry Award 2020
• Wool Storage, Sampling and Testing Award 2020

^[1] An employee is entitled to an extra week’s leave if a modern award or enterprise agreement applies to them and defines them as a shiftworker for the purposes of the NES. Award/agreement-free employees are shiftworkers for these purposes if they meet the requirements of s.87(3)–(5) of the Fair Work Act 2009.