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For the first time, award-covered workers can cash out annual leave by agreement with their employer

“Following a major case in the Fair Work Commission (FWC) that continued for over two years, numerous awards have now been varied to allow the cashing-out of annual leave for award-covered employees, and to give employers new rights to direct employees to take excessive accrued annual leave. The leading role played by Ai Group in the case was very important in the achievement of this outcome, which is a win for employers and employees”, Australian Industry Group Chief Executive Innes Willox said today.

“Following a major case in the Fair Work Commission (FWC) that continued for over two years, numerous awards have now been varied to allow the cashing-out of annual leave for award-covered employees, and to give employers new rights to direct employees to take excessive accrued annual leave. The leading role played by Ai Group in the case was very important in the achievement of this outcome, which is a win for employers and employees”, Australian Industry Group Chief Executive Innes Willox said today.

The award variations deal with:

  • The cashing out of annual leave by agreement between an employer and an employee;
  • Employer and employee rights regarding excessive leave accruals;
  • Payment for annual leave through electronic funds transfer (EFT) in accordance with the usual pay cycle;
  • The taking of annual leave in advance by agreement between the employer and the employee.

A new clause has been inserted into nearly all awards enabling an employer and an employee to agree in writing to the cashing out of a particular amount of annual leave, subject to a number of requirements including:

  • An agreement must not result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks;
  • The maximum amount of accrued paid annual leave that may be cashed out in any period of 12 months is 2 weeks; and
  • Each cashing out of a particular amount of paid annual leave must be the subject of a separate written agreement.“The new cashing-out provisions are operative from 29 July 2016. “The new arrangements only apply to award-covered employees. Award-free employees have been able to cash out annual leave (in excess of four weeks of accrued leave) by agreement with their employer for several years.

“The new arrangements will ensure that employees and employers have access to flexible arrangements to meet their specific circumstances,” Mr Willox said. 

Media EnquiriesTony Melville – 0419 190 347

For the details of the variations made to each award, see:   Schedule of final determinations

The Australian Industry Group (Ai Group) is a peak industry association in Australia which represents the interests of more than 60,000 businesses in an expanding range of sectors including: manufacturing; engineering; construction; food; transport; information technology; telecommunications; labour hire; and defence. The businesses which we represent employ more than 1 million people. aigroup.com.au