FWC releases paid annual leave decision

by Chloe Taylor11 Jun 2015
The Fair Work Commission has released its Full Bench decision on changes to modern awards in relation to paid annual leave. The decision was issued as a part of a four yearly review of modern awards.

Excessive annual leave

The Full Bench agreed to provide a model term to deal with the taking of excessive annual leave. The model term will incorporate the employer’s right to direct an employee to take their excessive annual leave, while preparing for circumstances in which an employee accrues excessive paid annual leave but no employer direction is made. The model term will also provide employees with more power when it comes to exercising control over when their leave is to be taken.

The Full Bench also observed that ‘greater consistency in the provisions governing the taking of annual leave will make the safety net simpler and easier to understand’, and on that basis formed the provisional view that a model term dealing with excessive leave should be inserted into all modern awards.

Cashing out

The Full Bench approved the insertion of a standard clause relating to cashing out of annual leave, incorporating four safeguards into 120 modern awards:
  • A maximum of two weeks’ paid annual leave can be cashed out in any 12 month period (in the case of part-time employees, this is based on the employee’s weekly ordinary hours)
  • Specific requirements relating to record keeping and the content of any agreement relating to cashing out accrued annual leave
  • If the employee is under 18 years of age the agreement to cash out a particular amount of accrued paid annual leave must be signed by the employee’s parent or guardian
  • Notes are inserted at the end of the model term, which draw attention to the Fair Work Act’s general protections against undue employer influence and misrepresentation
Annual close-down

The Full Bench was not persuaded to grant a model ‘close-down’ clause into modern awards for three reasons:
  • The Full Bench was not satisfied that the model term proposed was ‘reasonable’, due to the broad nature of the provision and the limited notice period required
  • It was found that close-down provisions warrant consideration on an award-by-award basis. The Full Bench observed that the circumstances of the industries covered by existing closedown provisions and the need for such provisions vary considerably.
  • An Employer Group proposed that the model term would provide a mechanism by which employers could reduce their leave liability. The Full Bench noted that these issues have been addressed in the consideration of the ‘excessive leave’ claim.
Purchased leave

A Fair Work Commission discussion paper will be published dealing with the issue of purchased leave. The matter will be listed for further hearing before the Full Bench on July 28.


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