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

^[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.