Annual Leave Entitlements

All full-time and part-time employees working under the national system are entitled to annual leave under the National Employment Standards (NES).

The annual leave requirements of the NES should be compared to any annual leave arrangements in an applicable Award or employment contract if those provisions are more advantageous.

 

Annual Leave Accrual

Annual leave may be accrued by all full-time employees at a rate of four weeks (or 20 working days per annum). Part-time workers are qualified for a pro-rata share of their yearly leave balance.

While an employee is away from work on a paid leave (such as sick leave or annual leave), annual leave continues to accrue; however, it does not accrue while the person is away from work on an unpaid leave (such as unpaid parental leave or leave of absence).

Shift employees are entitled to an additional 1 week or 5 days of annual leave per year, accrued on a pro-rata basis for a part-time employee who works on a 24/7 roster and is routinely forced to work on Sundays and holidays.

Casual workers are not eligible for annual leave.

 

Utilising Annual Leave

An employee and their employer must jointly agree on when to give and take annual vacation. While each employee’s request will be taken into account, there may be times of the year when it is not possible to grant leave if it would jeopardise the employer’s economic interests.

An employee’s desire to take paid yearly leave cannot be unreasonably denied by the organisation.

 

Payment on Annual Leave

The pace at which annual leave accrues and the amount of payment due when annual leave is taken are both based on the employee’s normal working hours. For a period of yearly vacation, an employee is to be paid at their “base rate of pay,” with no loadings, monetary allowances, incentive-based payments and bonuses, overtime rates, or penalty rates.

 

Annual Leave Loading

Although it is not a requirement under the NES, annual leave loading is a frequent clause in many Awards, if applicable. Annual leave loading can be offset for award-bound employees with pay and suitable offset clauses in their employment contracts.

 

Excessive Leave

When an employee takes an excessive amount of leave, there are specific restrictions in the Awards. More than 8 weeks of accumulated annual leave constitutes “excessive leave.” The employer must consult with the employee and really attempt to come to an agreement on how to decrease or eliminate the excessive leave accrual before directing the employee to take leave if they have an excessive amount of accumulated leave.

The following conditions must be met before the employer can order the employee to take annual leave if an agreement cannot be reached:

  • The employee’s remaining leave accrual cannot be less than six weeks. Therefore, if an employee has 8 weeks of leave (the required amount to qualify as “excessive leave”), the most amount of time an employer can order them to take is 2. They would have 4 weeks instead of 10, etc;
  • The employee cannot be forced to take a leave of absence for a shorter time than a week by the company; and
  • The employee must be informed 8 to 52 weeks in advance of the leave’s start date (no more, no less).

If an employee receives such a directive, they may still ask to take the leave in another manner (such as a different amount of leave, or at a different time – like a time that suits their preference for a holiday arrangement etc). A request of this nature cannot be arbitrarily denied by the employer. Depending on the situation, “unreasonable” will mean different things.

 

Cashing Out Annual Leave

Only Award-free employees and Award-covered employees may cash out, and only if their Award expressly enables it.

With the sincere consent of the employee and employer, annual leave may be cashed out for a maximum of two weeks in any 12-month period, leaving at least four weeks of remaining time after any cashing-out has taken place.

 

Annual Leave on Termination

According to the Fair Work Act, the employer is required to give the employee the money that would have been due to them had they used all of their accrued leave up until the time of their termination. Therefore, if applicable, this would include payments like annual leave loading.

 

How HR Connect can help

If you require assistance with dealing with disciplinary issues concerning staff, HR Connect can help. Our HR Advisors will be able to guide you through each step of the disciplinary process and we have template documents (e.g. direction to attend a disciplinary meeting, written warning, letter of termination, etc) available as part of our subscription packages.

 

 

About HR Connect

HR Connect is one of Australia’s leading providers of HR & workplace safety advice services, designed to help small business owners make confident and compliant business decisions.

 

Disclaimer

The information provided in these knowledge base articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice. The information in this summary is correct as of August 2021.

 

This knowledge base article will change over time, as Modern Award legislation relating to this Industry or Occupation is passed by the Fair Work Commission. Originally published on 21 September 2021 and last updated on 18 February 2022.

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