New Rules About Cashing Out Annual Leave Entitlements

three-money-trees-smallDid you know that from 29 July 2016 new rules came into affect allowing some employees to cash out their annual leave entitlements in some awards? These changes came about to allow for more flexible working arrangements between employers and employees.

Some awards and registered agreements allow for annual leave to be cashed out. For employees who are award and agreement free, they may be able to come to an agreement with their employer to cash out annual leave at any time.

According to the Fair Work Ombudsman, regardless of the terms an employee is employed under, in all cases the following rules apply:

  • the employee must retain at least four weeks annual leave
  • there must be a signed, written agreement with the employer each time annual leave is cashed out that states the amount being cashed out, the amount to be paid and the date it will be paid
  • the payment for the cashed out leave is to be the same as what would have been paid if the employee took the leave

An employee can only be directed to take annual leave in some instances. For example, if a business closed during the Christmas and New Year holiday period or if the employee accumulated excess annual leave. It is illegal though for an employer to force, or try and force, an employee to agree, or not agree, to cashing out their annual leave.

To find out more, you can head to Fair Work or give us a call.