News & Views

In a decision made on 11 June 2015, a Full Bench of the Fair Work Commission has addressed a number of employer and employee submissions on varying annual leave clauses in a number of awards as part of the four Yearly Review of Modern Awards (the Review). Annual leave was dealt with as a common issue affecting a significant number of awards. 

In its decision, the Full Bench made determinations on; cashing out annual leave, excessive annual leave, annual close down, granting annual leave in advance, payment of annual leave on termination of employment, and paying annual leave by EFT. 

Employers who are parties to Enterprise Agreements approved by the Fair Work Commission are not affected by this decision immediately. The decision will have some effect when making new agreements under the better off overall test (BOOT). 

The effect of the decision on the Electrical, Electronic and Communications Contracting Award 2010 is as follows:

Cashing Out Annual Leave

A new clause permitting the cashing out of annual leave will be inserted in the Award. The clause permits an employee and employer to agree to allow the employee to cash out a maximum of two weeks of accrued annual leave in any 12 month period. The amount to be cashed out must not leave the employee with less than eight weeks of accrued annual leave. 

Excessive Annual Leave Accruals

The Full Bench formed the provisional view that a consistent clause (the model clause) dealing with an employer’s right to direct an employee to take an amount of annual leave where the employee has accrued an excessive amount of annual leave should be inserted in all modern awards. Parties were invited to make further submissions on this matter before the Full Bench reaching a concluded view. The awards have not been varied at this time.

If adopted the model clause will replace clause 28.5 of the Award. Under the model clause an employee has an excessive accrual of annual leave if he or she has more than eight weeks of accrued annual leave (or 10 weeks in the case of a shift worker). The employee must be given at least eight weeks notice of the requirement to take the leave. An employee cannot be directed to take less than one week of leave and cannot be directed to take an amount of leave that would leave the employee with less than six weeks of annual leave. 

Annual Close Down

The Award at clause 28.4 already permits an employer to direct an employee to take annual leave during an annual closedown by providing at least two months notice. The Full Bench declined to insert an annual close down provision in any awards that do not already have such a provision. 

Granting Leave in Advance

The current provision at clause 28.7 of the Award will be retained. 

Payment of Annual Leave on Termination

The Full Bench declined to vary any award in terms sought by the unions and noted that the proper construction of the relevant section of the Fair Work Act is currently the subject of an appeal before the Full Court of the Federal Court. 

Paying Annual Leave by EFT

The new clause will permit an employer to pay an employee by EFT in accordance with their normal pay cycle when on annual leave if the employee is ordinarily paid by EFT. 

Members who have any question should contact Gordon Jervis on (02) 9744 1099.