Can you cash out your annual leave? Yes you can!

A recent reform via the Fair Work Commission has seen a major change to the way cashing out of annual leave is treated. For those who don’t know, “cashing-out” means an employee can receive their annual leave as a lump sum payment whilst still working i.e. instead of taking time off work. So how does this work and what does it mean for those affected?

What you need to know about cashing-out annual leave

1. Once you’ve agreed to allow your employee to cash-out annual leave, you must put this in writing. The agreement must include the amount to be paid, on which date and the number of hours to be taken.

2. Employers cannot force employees to cash-out leave, however, they will receive greater powers to enable them to “encourage” those employees who have large amounts of annual leave to use some of it.

3. Cashing-out is only allowed if it is part of the employee’s award or registered agreement. To find out if your award allows cashing-out, go this Fair Work page.

4. An employee must have 4 weeks of annual leave left after the cash-out to be eligible.

5. An employee cannot cash-out more than 2 weeks annual leave per 12 months.

6. These changes regarding cashing-out begin from the first pay period on or after 29th July 2016.

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