For the first time, millions of award-covered Australian workers will be able to cash-out their annual leave by agreement with their employer.



Millions of Australian employees will now be able to cash-out their annual leave, instead of being forced to take it or having it accrue over time.


A major Fair Work Commission case that continued for over two years on Thursday delivered the ruling, which also gives new rights to employers.


A new clause has been inserted into nearly all awards, enabling an employer and an employee to agree in writing to cashing out a particular amount of annual leave. There are several requirements, including that:

  • A separate agreement must be made every time paid annual leave is cashed out.
  • An employee can cash out a maximum of two weeks per 12 months.
  • An employee must have a minimum of four weeks annual leave leftover.

Australian Industry Group (Ai) chief executive Innes Willox said: “The leading role played by Ai Group in the case was very important in the achievement of this outcome, which is a win for employers and employees."

“The new arrangements will ensure that employees and employers have access to flexible arrangements to meet their specific circumstances."


The Australian Council of Trade Unions said it feared the arrangement could compromise employee health and well-being.

“Taking annual leave rather than trading it away should be encouraged by employers and embraced by employees,” ACTU secretary Dave Oliver said.


“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 earned.”


The new cashing-out provisions are operative from July 29, 2016 and only apply to award-covered employees. 

Contact Capaciti on 1300 347 960 to help you manage your HR issues, annual leave cashout policy and reduce your risk of penalties