By David Bates

If your employees are covered by one of the nation’s 122 Modern Awards, chances are you’re unaware significant changes were made by the Fair Work Commission to their annual leave entitlements in 2016.

These changes – many of which were made after years of lobbying by employers – are of considerable importance to you and your business. They allow:

  • employers to direct an employee to take annual leave once they have accrued an ‘excessive’ annual leave balance; and
  • employees to cash-in a portion of their accrued annual leave; and
  • employers to recover annual leave ‘debts’ via deductions from final pay if an employee has been provided with annual leave in advance of its accrual, and the employee subsequently leaves before their accrual has returned to a positive balance.

Crucially, however, these changes generally only apply to employees who are covered by a Modern Award which has been specifically amended by the Fair Work Commission (most of them have been). Given that Modern Awards apply as a matter of law and not choice or preference, it’s accordingly very important for all employers to confirm:

  • if their employees are covered by a Modern Award; and
  • whether that Modern Award has been varied by the Fair Work Commission to include the above-mentioned changes.

For those employers already familiar with Australia’s employment laws, it won’t be surprising to learn these annual leave changes are accompanied by a large number of very strict rules which must always be carefully followed. 

For example, if an employee wants to cash-in some of their annual leave, they must:

  • have a remaining balance of at least 4 weeks’ annual leave after the cashing-in has been processed; and
  • be paid the same amount that they would have received had the annual leave actually been taken; and
  • record the agreement to cash-in annual leave in writing; and
  • not cash-in more than two weeks of annual leave in any 12 month period.


Despite the abundance of bureaucracy imposed by the Fair Work Commission, these changes are ultimately good news for employers. Of course, they’re of no benefit at all if employers don’t know about them. 

Given how rarely the Commission appears to support businesses these days, it’s definitely worth taking the time to familiarise yourself with the Awards which apply to your workplace and making the most of these recent amendments.