Fair Work Act 2009

An employer and an award/agreement free employee may agree to the employee cashing out a particular amount of the employee’s accrued paid annual leave.

The employer and the employee must not agree to the employee cashing out an amount of paid annual leave if the agreement would result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks.

Each agreement to cash out a particular amount of paid annual leave must be a separate agreement in writing.

The employer must pay the employee at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

An employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable.

A requirement to take paid annual leave may be reasonable if, for example:

the employee has accrued an excessive amount of paid annual leave; or

the employer’s enterprise is being shut down for a period (for example, between Christmas and New Year).

An employer and an award/agreement free employee may agree on when and how paid annual leave may be taken by the employee.

Matters that could be agreed include, for example, the following:

that paid annual leave may be taken in advance of accrual;

that paid annual leave must be taken within a fixed period of time after it is accrued;

the form of application for paid annual leave;

that a specified period of notice must be given before taking paid annual leave.