Legal E: Changes to Awards - Annual Leave

Fair Work Commission Makes Changes to Awards regarding Annual Leave

As part of its obligatory review of the Modern Awards brought into existence in 2010, the Fair Work Commission this morning handed down a decision which will make changes to the annual leave provisions in those Awards.

The Decision

The decision deals with matters relating to:

  • cashing out of annual leave – a model clause will be inserted in all Awards establishing a code for cashing out leave
  • excessive annual leave – all Awards will now have a model clause allowing an employer to direct an employee to take annual leave, provided a minimum of six weeks’ entitlement is left to them
  • annual close-down – interested parties can seek to insert clauses on an individual Award basis later in the Review
  • granting annual leave in advance – a model clause will be inserted into 48 Awards to deal with this. The Commission indicated that it intends to expand that to all Awards unless it is convinced otherwise later in the Review.
  • purchased leave – the Commission is considering a scheme where instead of being paid for work performed, an employee could be given an equivalent amount of annual leave entitlement. The Commission is considering this proposal and will publish a discussion paper in the near future.
  • payment of annual leave entitlements on termination – there is uncertainty about the interpretation of the Act as to how such payments are calculated. The Commission adjourned consideration until a Federal Court decision and legislative amendments have been made; and
  • electronic funds transfer (EFT) and paid annual leave – 51 Awards which required annual leave to be paid at the commencement of leave will be varied so that leave is paid as part of the normal pay cycle.
  • the various amendments will be published in the Awards in the near future and you will need to ensure that you are complying with the changes to the Award covering your employees.

In particular, you will need to inform yourself about the model clauses and the way that you have been paying annual leave entitlements to your employees. 

Joanna Andrew, Partner                                       
Ph: (08) 8414 3454                                                              
Elizabeth Olsson, Senior Associate
Ph: (08) 8414 3413

The contents of this E-Alert is for general information only. It is not intended as professional advice - for that you should consult a solicitor or barrister, or any other suitably qualified professional such as your accountant.

Practice Area: Employment

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