On 23 May 2016, the Fair Work Commission (FWC) handed down a decision as part of their four-yearly review of the modern awards. Last year the FWC determined model clauses regarding ‘cashing out of annual leave’; ‘excessive annual leave’; ‘electronic funds transfer and paid annual leave;’ and ‘granting leave in advance’.
Cashing out of annual leave
The cashing out model term has been revised and will be inserted into 115 modern awards, including the Fast Food Industry Award 2010 and the General Retail Award 2010, for reasons outlined in the June 2015 decision. Interested parties will have the opportunity to comment on the plain language revisions to the model term and template agreement within 7 days of the publication of the draft determinations.
EFT and paid annual leave
The 51 modern awards that currently require an employer to pay an employee for annual leave prior to an employee taking the leave will be varied to allow employees paid by electronic funds transfer to be paid in accordance with their usual pay cycle whilst on annual leave. This variation will, however, not change any annual leave payments made to employees who are paid by cash or cheque.
Leave in advance
Employer representatives sought the variation of 48 modern awards, including the Fast Food Industry Award 2010 and the General Retail Award 2010, to include a provision to allow the taking of annual leave in advance of accrual of the entitlement, by agreement between the employer and employee. The Full Bench decided that an award that facilitates agreements to take leave in advance would operate in a mutually beneficial manner. This term will allow employees, with the agreement of the employer, to take paid annual leave at a time when they may not be able to otherwise and will align with entitlements of the applicable modern award. The defined differences between the model term and the changes sought by employers, are the requirements regarding the content and form of an agreement to provide leave in advance and the employer’s obligation to keep agreements on record. The decision to revise the leave in advance model term will be inserted into 116 modern awards.
Excessive annual leave
Employers sought to insert a provision into certain awards, including the Fast Food Industry Award 2010 and the General Retail Award 2010, to deal with excessive annual leave. The decision sets out a re-draft in Attachment 2 that provides that:
- A direction by the employer is of no effect if it would result at any time in the employee’s remaining accrued entitlement to paid annual leave being less than 6 weeks, when any other paid leave arrangements are taken into account: subclause 29.7(b)(i);
- An employee to whom a direction has been given may request to take a period of paid annual leave as if the direction had not been given: subclause 29.7(d);
- An employee must take paid annual leave in accordance with a direction given by the employer that is in effect: subclause 29.7(c);
- Paid annual leave arising from a request by the employee may result in the direction ceasing to have effect: Note 1 to subclause 29.7(d).
The FWC has acknowledged the introduction and variation of model terms into the modern awards is a significant change, consequently, they have proposed the publication of an information note on the annual leave model terms after the variation determinations come into effect.
NRA’s Workplace Advisors are ready to answer any questions you may have regarding these changes to annual leave. Call us on 1800 RETAIL (738 245) or email [email protected].