Fair Work Commission rules on "excessive" annual leave accruals

The Fair Work Commission has ruled that employers will have the right under 70 modern awards to direct workers to take annual leave if they have excessive annual leave accruals exceeding eight weeks. 

Earlier this year, the Fair Work Commission (FWC) accepted requests by employer groups to insert clauses into modern awards concerning annual leave entitlements. The FWC has now finalised the model term relating to employees who have “excessive” annual leave accruals.

Under the term, an employee who has accrued eight weeks annual leave (ten weeks if they are a shift worker), may be requested by their employer to reduce their accrued leave. The provision requires an employer first to confer with the employee to genuinely try to reach an agreement that will result in the employee reducing their annual leave. If an agreement cannot be reached, an employer may direct an employee to take leave. This direction, however, must:

  • Not result in the employees accrued annual leave being less than six weeks,
  • Not require the employee to take a period of leave less than one week;
  • Give the employee at least eight weeks, but less than twelve months’ notice of the requirement to take leave;
  • Not be inconsistent with any leave arrangement agreed between the parties.

If an employer does not direct an employee to take annual leave if they have excessive annual leave accruals, the employee may give written notice that they wish to take annual leave.

Interested parties are now able to make submissions and file evidence in relation to whether the model term should be inserted into particular modern awards.

The full decision of the FWC can be read here

The FWC found that there was interest in providing such an arrangement. Interested parties have the opportunity to make submissions on the issue, after which the FWC will publish a discussion paper.