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.

Over the course of their employment, some employees can accrue excessive annual leave balances. Not taking a reasonable amount of annual leave may pose a threat to the health and safety of employees and represent a significant financial liability for employers.

Following recent decisions of the Fair Work Commission, most modern awards now provide for employers to direct employees to whom the awards apply with excessive leave balances to take paid annual leave. Also, in certain circumstances, such employees can give their employer a written notice requiring paid annual leave to be granted.

What is an excessive leave accrual?

Under the new award clause an employee has an excessive leave accrual if:

• the employee has accrued more than eight weeks’ paid annual leave, or
• for a shiftworker^[1] if they have accrued more than 10 weeks’ paid annual leave.

Discussions between employer and employee

As a first step, if an employee has an excessive leave accrual, the employer or the employee may seek to confer with the other and genuinely try to reach agreement on how to reduce or eliminate the excessive leave accrual.

What can an employer do?

If the employer has genuinely tried to reach agreement with the employee as a first step but agreement is not reached, the employer may direct the employee in writing to take one or more periods of paid annual leave.

A direction under the award clause to take annual leave:

• must be in writing
• is of no effect if it would result at any time in the employee’s remaining paid annual leave balance being less than six weeks when any other paid annual leave arrangements are taken into account
• must not require the employee to take any period of paid annual leave of less than one week
• must not require the employee to take a period of annual leave beginning less than eight weeks or more than 12 months, after the direction is given, and
• must not be inconsistent with any leave arrangement agreed by the employer and employee.

The employee must take paid annual leave in accordance with this direction under the award clause that is in effect.

Employees should note

Even if an employee has been directed under the award clause to take paid annual leave, the employee may request to take a period of paid annual leave as if the direction had not been given.

For example, the employee might request to take some or all of the directed leave at a time or times that better suit the needs of the employee. Under the NES, the employer cannot unreasonably refuse such a request.

If the employee’s request for leave is granted and this would result at any time in the employee’s remaining paid annual leave balance being less than six weeks (when any other paid annual leave arrangements, including the directed leave, are taken into account), the direction to take leave will cease to have effect.

What can an employee do?

If the employee has genuinely tried to reach agreement with the employer as a first step but agreement is not reached, the employee may in some circumstances give a written notice to the employer requesting to take one or more periods of paid annual leave.

The circumstances in which the employee can give a notice under the award clause requesting annual leave are:

• the employee has had an excessive leave accrual for more than six months, and
• the employee has not been given a direction by the employer, under the award clause, to take paid annual leave that, when any other paid annual leave arrangements are taken into account, would eliminate the employee’s excessive leave accrual.

A notice under the award clause requesting annual leave:

• must be in writing
• must not result in the employee’s remaining paid annual leave balance being at any time less than six weeks when any other paid annual leave arrangements are taken into account
• must not provide for the employee to take any period of paid annual leave of less than one week
• must not provide for the employee to take a period of paid annual leave beginning less than eight weeks or more than 12 months after the notice is given
• must not be inconsistent with any other leave arrangement agreed by the employer and employee.

The employer must grant paid annual leave requested by a notice under the award clause.

There is a limit to the amount of paid annual leave that an employee can request by a notice under the award clause in any 12 month period. The limit is four weeks’ paid annual leave or five weeks’ paid annual leave for a shiftworker^[1] in any 12 month period.

What if there is a dispute?

Disputes in relation to excessive leave accruals can be dealt with under the dispute resolution procedure in the award.

Can excessive leave clauses be included in enterprise agreements?

Enterprise agreements may already contain excessive leave clauses.

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

When does this new clause come into effect?

The new clause came into operation in most awards on 29 July 2016^[2].

Employees should note that the arrangements for an employee to give a written notice under the award clause requesting leave (as described above), do not commence until 12 months after the rest of the excessive leave clause (29 July 2017).

Further information

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 excessive annual leave clause

• Aboriginal Community Controlled Health Services Award 2020
• Aged Care Award 2010
• 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 2010
• Animal Care and Veterinary Services Award 2020
• Aquaculture Industry Award 2020
• Architects Award 2020
• Asphalt Industry Award 2020
• Banking, Finance and Insurance Award 2020
• Book Industry Award 2020
• Broadcasting and Recorded Entertainment Award 2010
• Building and Construction General On-site Award 2010
• Business Equipment Award 2010
• 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 2010
• Coal Export Terminals Award 2020
• Commercial Sales Award 2020
• Concrete Products Award 2020
• Contract Call Centre Award 2010
• Corrections and Detention (Private Sector) Award 2020
• Cotton Ginning Award 2020
• Dredging Industry Award 2010
• Dry Cleaning and Laundry Industry Award 2020
• Educational Services (Post-Secondary Education) Award 2020
• Educational Services (Schools) General Staff Award 2010
• Electrical Power Industry Award 2020
• Electrical, Electronic and Communications Contracting Award 2010
• Fast Food Industry Award 2010
• Fire Fighting Industry Award 2020
• Fitness Industry Award 2010
• Food, Beverage and Tobacco Manufacturing Award 2010
• Funeral Industry Award 2010
• Gardening and Landscaping Services Award 2020
• Gas Industry Award 2020
• 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
• Horticulture Award 2010
• Horse and Greyhound Training Award 2010
• Hospitality Industry (General) Award 2010
• Hydrocarbons Field Geologists Award 2020
• Hydrocarbons Industry (Upstream) Award 2020
• Joinery and Building Trades Award 2010
• Journalists Published Media Award 2010
• Labour Market Assistance Industry Award 2020
• Legal Services Award 2020
• Live Performance Award 2010
• Local Government Industry Award 2010
• Mannequins and Models Award 2020
• 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 2020
• Market and Social Research Award 2020
• Meat Industry Award 2020
• Medical Practitioners Award 2020
• Mining Industry Award 2020
• Miscellaneous Award 2010
• Nursery Award 2020
• Nurses Award 2010
• Oil Refining and Manufacturing Award 2020
• Passenger Vehicle Transportation Award 2020
• 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 2020
• Ports, Harbours and Enclosed Water Vessels Award 2010
• Poultry Processing Award 2020
• Premixed Concrete Award 2020
• Professional Diving Industry (Industrial) Award 2020
• Professional Diving Industry (Recreational) Award 2020
• Professional Employees Award 2010
• Racing Clubs Events Award 2010
• Racing Industry Ground Maintenance Award 2020
• Rail Industry Award 2010
• Real Estate Industry Award 2020
• Registered and Licensed Clubs Award 2010
• Restaurant Industry Award 2010
• Road Transport (Long Distance Operations) Award 2020
• Road Transport and Distribution Award 2020
• Salt Industry Award 2010
• Seafood Processing Award 2020
• Seagoing Industry Award 2010
• Security Services Industry Award 2010
• 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 2010
• Supported Employment Services Award 2010
• Surveying Award 2020
• Telecommunications Services Award 2010
• Timber Industry Award 2010
• Transport (Cash in Transit) Award 2020
• Travelling Shows Award 2020
• Vehicle Manufacturing, Repair, Services and Retail Award 2010
• Waste Management Award 2020
• Water Industry Award 2020
• 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.

^[2] Employers and employees should refer to the award(s) which apply to them for the commencement date of the new excessive leave clauses.