Now you can ‘cash out’ annual leave

WORKAHOLICS rejoice. Rather than taking that excess annual leave, you can now ask your employer for the cash instead.

AROUND two million Australian workers can now “cash out” some of their excess annual leave under new rules that came into effect this week.

Under the new clauses, inserted by the Fair Work Commission into 112 modern awards earlier this year, employees can cash out two weeks’ worth of accrued annual leave every 12 months, provided they still have four weeks remaining afterwards.

The employee and the employer must agree to the payout in writing, and the amount must not be less than would have been payable had the leave been taken at the time the payment is made.

Business leaders pushed for the changes to allow for more flexible working arrangements, but trade unions have warned the move could lead to workplace conditions being eroded.

Australian Council of Trade Unions secretary Dave Oliver told Fairfax the union movement was concerned the FWC decision “supports the idea that annual leave need not be taken and should be treated as a commodity rather than an entitlement designed to maintain the health and wellbeing of the workforce”.

“The fact that employees tend not to take the annual leave they have accrued indicates that employers are not creating work environments in which employees feel secure taking the leave that they have earnt,” he said.

James Pearson, chief executive of the Australian Chamber of Commerce and Industry, said the FWC decision showed it was “prepared to listen to the needs of business”.

“While employers did not get everything they wanted, the reasonable changes will help businesses better manage annual leave,” he said in a statement.

Mr Pearson said the proceedings highlighted the lack of flexibility in the modern award system, and that ACCI had worked hard to secure “sensible changes”.

Along with annual leave cashouts, they include giving employers greater powers to force employees to use excessive accrued annual leave, and the ability to grant leave in advance.

“Employer applications to vary weekend penalty rates in the retail, pharmacy and hospitality sectors will be a further test of the system’s capacity to adapt to the needs of the modern economy,” Mr Pearson said.

The FWC’s decision on whether to reduce weekend penalty rates in those industry awards is expected in September.

“Employer representatives have put a comprehensive evidence-based case for change to the Fair Work Commission,” Mr Pearson said.

“The evidence demonstrates how reducing penalty rates, particularly on Sundays, can improve job opportunities.

“Australian society, including our economic base, has changed significantly since penalty rates began. Weekend work is now common and consumers expect many services to be available on weekends.

“Too many businesses are struggling to open on weekends because of the impact of excessive penalty rates.”