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Annual leave, or holiday pay, is leave which allows employees to take time off work while being paid. The minimum annual leave comes from the National Employment Standards (NES), though some employers are able to give employees more leave if they wish.
As one of the ten National Employment Standards (NES), annual leave is an essential part of working life and something that you as an employer should be aware of. The most important thing for you to remember is that all employees (other than casuals) are entitled to four weeks away from work each year, or five weeks if they are shift workers. But there are also various other aspects to annual leave that you should know about including entitlements for shift workers, accrual of annual leave, directing employees, and cashing out annual leave.
Shift workers have different annual leave entitlements to regular employees. According to Australian legislation, under the Fair Work Act 2009, an employee is considered to be a shift worker if they:
So if you are an employer with workers under these arrangements, they are entitled to five weeks of annual leave.
Annual leave accrual is something employers often misunderstand. There is a common misconception that as soon as an employee joins a company, they are entitled to their full leave. However, leave builds up after each pay period, with its accrual beginning when the employee joins the company. Unless it is an unreasonable request, employees can take annual leave at any time after it has been accrued, and annual leave will continue to accrue while they are on any form of paid leave.
It is important to know that you have to pay your employees their usual rate of compensation while they are on annual leave unless their Award, agreement or contract says it must be more.
Another thing to keep in mind is that if an employee stops working for you before they have used up their annual leave, you as the employer are required to pay out the sum of their accrued leave when their employment ends.
In some cases, employers may need to direct their employees to take annual leave, and a lot of the time the circumstances are reasonable. For instance, if a business is shutting down over the Christmas period.
Under most Modern Awards and some agreements employers are entitled to direct their employees to take annual leave. That is provided that the circumstances are reasonable.
There are some Awards and agreements which allow employees to request a cash out on their annual leave. But even if an Award or agreement does not cover them, they are still able to come to an arrangement with you (their employer) to be paid out for their annual leave.
An agreement to cash out annual leave must be in writing. and pay the same amount as if the employee had taken annual leave. It is also necessary for the employee to have at least four weeks of annual leave left for a payout to occur.
Employsure are specialists in helping you manage all annual leave entitlements. If you have any questions or want to know more about managing annual leave for your employees, contact an Employsure specialist today on 1300 651 415. As Australia’s leading workplace relations specialist, we are here to help.
For peace of mind, please call our 24-hour Advice Line now on 1300 651 415