Cashing out leave to cost $29 billion

by 28 Nov 2006

FEDERAL GOVERNMENT plans that will allow employees to cash out personal leave could cost business up to $29 billion, or each employer an average of $22,795, according to new research.

Just over one-third of businesses have employees who would be eligible to claim a cash payout, while $7,901 will be the average individual payout amount for cashed in personal leave and 19.5 days is the average amount of accrued personal leave.

Under recent amendments to WorkChoices, full-time employees will be allowed to cash out personal/carers’ leave, providing they leave a minimum balance of 15 days. Employees need to request cashing out of leave in writing as well as consent from their employer.

The research, which was conducted by payroll outsourcing company Aussiepay, and based on its database of almost 6,900 full-time employees from 400 individual employers, also found the average eligible recipient for cashing in of leave is aged 43.4 years with tenure of 7.53 years.

For the average Australian employee, especially one who’s been with the same employer for a number of years, the amendment to WorkChoices means they’re in for a nice cash bonus in 2007 if the legislation is passed, according to Aussiepay’s managing director, Dean Morelli.

“Likewise, now that employees have an incentive to save up their leave entitlements, it gives HR professionals a means to help minimise the inappropriate use of personal leave,” he said.

If HR professionals are concerned about the financial impact of cashing out personal leave entitlements, Morelli said they could attempt to put in place AWAs for employees with more than 15 days’ accrued personal leave.

However, he said the change should be looked upon as a positive opportunity to reward valued employees.

The Federal Government also made other amendments to WorkChoices. Personal/carers’leave will now be payable at the basic periodic rate of pay (the same as for annual leave); overtime will be removed from the accrual formula for annual and personal/carers’ leave; and the hours of work record-keeping requirements have been significantly relaxed.

Under this change, employers will only be required to record those hours for which an employee is entitled to overtime or other penalty rates, rather than all hours worked, which is similar to the relevant pre-WorkChoices record-keeping requirements.

Employers will also benefits from new provisions allowing them to stand down workers without pay who are left idle due to factors outside the employer’s control, such as a natural disaster or industrial action.

The Federal Government said any right to stand down must come from a workplace agreement, employment contract, industrial instrument, or legislation. In the absence of a stand down right, an employer will usually have to choose between continuing to pay the employee (despite lack of work to do), or dismissing the employee.


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