The Fair Work Commission (FWC) has varied some awards with new or changed terms about taking annual leave. Most changes take effect from 29 July 2016.

There are changes to rules about:

  • Cashing out annual leave;
  • Taking annual leave in advance;
  • Managing large (‘excessive’) annual leave balances;
  • Payment for annual leave.

Here is a summary of the changes below.

Cashing out annual leave

Most awards now allow employees to cash out annual leave, if they:

  • Have at least 4 weeks annual leave left after the cash out.
  • Have signed a written agreement with their employer.
  • Don’t cash out more than 2 weeks each 12 months.

Find out whether cashing out is now allowed under your award and what the rules are by clicking here to visit the Fair Work Ombudsman website – Cashing out annual leave page.

Taking annual leave in advance

Most awards now allow employees to take annual leave before they have accrued it if their employer agrees in writing. The agreement needs to:

  • Be signed by both the employer and the employee.
  • Say how much annual leave is being taken in advance.
  • Say the day the leave will start.

Find out whether taking annual leave in advanced is allowed under your award by clicking here to visit the Fair Work Ombudsman website – Taking annual leave page.

Managing excessive annual leave balances

The rules about what happens if an employee has accumulated an excessive annual leave balance have been changed in some awards. Excessive annual leave is when an employee has accumulated at least 8 weeks leave (10 weeks for shiftworkers).

Direction by employer

If an employee has an excessive annual leave balance and can’t agree with their employer on when to take it, the employer can:

  • Tell the employee, in writing, that they must take annual leave.
  • Give the employee at least 8 weeks notice (and no more than 12 months) of when the leave will start.

There are rules about how long the period of leave has to be and how much the employee has to have left afterwards. Find our more and whether this applies to you by clicking here to visit the Fair Work Ombudsman website – Direction to take excess annual leave page.

Notice by employee

Some awards have a new clause allowing employees with excessive annual leave balances to tell their employer that they will take a period of leave. This clause takes effect from 29 July 2017.

Until July 2017, employees who are covered by these awards and have large amounts of accrued annual leave should follow the normal process for requesting annual leave.

Payment for annual leave

Some awards say that annual leave has to be paid before the employee starts their leave. A new clause has been added to these awards. Now, if an employee is paid by electronic funds transfer (EFT) , they can continue to be paid using their usual pay cycle during periods of leave.

Find out more and whether this applies to you by clicking here to visit the Fair Word Ombudsman website – Payment for annual leave page.
References:, ‘changes to annual leave in some awards’, 09/08/2016.