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By Emma Dalley
Indigo Legal Pty Ltd


The Fair Work Commission’s (FWC) decision on cashing out annual leave entitlements is now in effect.

As of the first pay period on or after 29 July 2016, employees now have the ability to cash out their annual leave entitlements in accordance with the General Retail Industry Award 2010 (clause 32.9).

The annual leave provisions in the award have been amended with regards to the following:

  • cashing out of annual leave
  • managing excessive annual leave
  • granting annual leave in advance.

Cashing out of annual leave

The changes allow employers and employees to agree to cash out accrued annual leave. Standard terms are incorporated into the majority of the modern awards which include the following safeguards:

1. All agreements relating to cashing out of annual leave must be made in writing in a stand-alone document; and if with an employee under the age of 18 years, must be signed by a parent or guardian of the employee.

2. A maximum of two weeks paid annual leave can be cashed out in any 12-month period. For part-time employees, the maximum paid annual leave permitted to be cashed out is prorated based on the employee’s weekly ordinary hours.

3. The amount must be equal to the full amount that would have been payable had the employee taken the leave at the time that it is cashed out.

4. Cashing out annual leave will not be available if it would result in the remaining annual leave entitlement being less than four weeks.

5. An employer must not place pressure on an employee to agree to cash out annual leave entitlements; or mislead an employee in regards to their rights under the cashing out provisions.

The FWC set out specific requirements relating to record keeping and the content of any agreement relating to cashing out accrued annual leave. Contact Employer Assist for more information.

Excessive annual leave

The FWC extended the provision relating to excessive annual leave to all of the modern awards. Employers will have the right to direct employees to take one week or more of accrued excessive annual leave, provided that the remaining annual leave entitlement is not less than six weeks. Excessive annual leave is defined as more than eight weeks paid annual leave (or 10 weeks if defined as a shift worker).

There are specific steps that must be taken prior to directing an employee to take their excessive annual leave. Contact Employer Assist for more information.

Granting annual leave in advance

Provided it is documented in writing, employers will be permitted to grant an employee paid annual leave in advance of the employee accruing an entitlement to such leave. If the employment is terminated prior to the accrual of the annual leave taken, the employer is entitled to deduct the difference due to the employee as final payment on termination. The FWC has again set out specific requirements to be met when drafting the agreement to grant annual leave in advance.

We recommended that employers review their employment contracts and workplace policies with a view to updating them in line with the changes.

Need assistance?

Employer Assist provides all Optometry Australia members with information and advice on all employment matters including the annual leave provisions. Contact Employer Assist on 1300 101 391 to discuss any employment issues that arise in your business.


This article is intended for information purposes only and should not be regarded as legal advice. Contact Indigo Legal for any legal advice required.

Filed in category: Uncategorised

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