Modern Awards to allow employers to direct employees to take annual leave

The full bench of the Fair Work Commission recently confirmed that the annual leave provisions in modern awards will be amended to include a right for employers to direct employees to take annual leave if their annual leave accruals exceed eight weeks. The ruling comes as part of the four-yearly review of modern awards and will assist employers to manage and control the accrual of excessive leave by employees.

Excessive Annual Leave Provision

FWC confirmed its earlier view from June 2015, and the wording of the term, regarding the direction by an employer to take leave where an employee has accumulated more than eight weeks annual leave (10 weeks for shiftworkers).

The provision requires that the employer and employer first make a genuine attempt to agree upon steps to reduce the excessive leave accrual, before the employer can direct that leave be taken.

Where a direction to the employee is given, the requirements include that:

a)    The employee’s remaining accrued annual leave is not less than six weeks;

b)    The length of directed leave is at least one week;

c)    The leave must not be directed to be taken more than 12 months after the direction is given; and

d)    The directions must not be inconsistent with any leave arrangement already agreed.

There is also a provision for the employee to make a request to take paid annual leave after receiving a direction under the clause, and for the employer to consider that request without taking into account that a direction had been given. The direction is then deemed to be withdrawn if the request is granted and as result the employee’s accrued annual leave is less than six weeks.

There is a reciprocal clause that provides an employee with the right to require that leave be granted, where the employee has had excessive leave accrual for more than six months and the employer has not issued a direction to take leave.

Implications for Employers

The Commission indicated that it has now finalised the terms and that the next phase is to deal with insertion of the terms into the modern awards. The matter is listed for further hearing before the full bench on 23 November 2015.

The inclusion of these provisions into modern awards will be an important tool to allow employers to manage the accrual of excessive annual leave. This will ensure that employees are receiving the intended benefit of taking sustained breaks from the workplace, and allow employers to better manage the costs and obligations around providing their employees with their entitlements.

Christine Broad



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