Fair Work flags plans for excess annual leave

Those who let their leave allocations expand past six weeks can expect a forced holiday from their employer

Fair Work flags plans for excess annual leave
The Fair Work Commission is looking at giving employers new rights on workers that save up excessive amounts of annual leave


The full bench of the Fair Work Commission (FWC) has the issue of excessive banks of annual leave firmly in its sights.

As part of its four-yearly review of modern awards, it is considering basic entitlements that cover all sectors of the workforce. This included a submission from the Australian Industry Group (Ai Group), the Australian Chamber of Commerce and Industry (ACCI), and other employer bodies that suggested ways of dealing with and discouraging large banks of annual leave.

The employers suggest that workers who have accrued more than six weeks’ worth of annual leave could be subject to directed leave from their bosses.  

"AI Group and ACCI submitted that excessive leave accruals create substantial contingent liabilities for businesses and give rise to cash flow problems when accrued annual leave is paid upon the termination of employment," the FWC’s analysis notes.

The Australian Council of Trade Unions agrees that excessive annual leave was an issue for businesses, but argues excessive leave banks are often caused by employers vetoing annual leave requests.

"The proposed clause is unlikely to achieve the benefits espoused because it fails to provide an employee with any autonomy as to when they take their annual leave," its submission to the FWC states.

"The proposal fails to foster any positive interaction between the employer and employee; rather, it simply provides an employer with the ability to dictate to an employee who has accrued six weeks’ annual leave to take it with four weeks’ notice."

It did not propose an alternative, but did offer some suggested safeguards – some of which have been included in a new model proposed by the FWC.

This includes a clause that demands employers seek to negotiate suitable leave reduction strategies with the employee before forcing leave to be taken at a specific time. It also notes that forced leave be of a minimum one week’s duration, and cannot leave an employee with a bank of less than four weeks.

The FWC is now accepting submissions from all stakeholders on the newly-proposed model.

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