Cashing out annual leave

Cashing out annual leave means an employee receives payment instead of taking time off work.

Cashing out annual leave under an award

Annual leave can only be cashed out when an award allows it.

Find out about cashing out annual leave in your award by selecting from the list below.

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Cashing out annual leave under a registered agreement

Annual leave can only be cashed out when a registered agreement allows it.

If you're covered by a registered agreement, check it for information on whether leave can be cashed out. To find an enterprise agreement, go to the Fair Work Commission website.

Certain rules apply when cashing out annual leave:

  • an employee needs to have at least 4 weeks annual leave left over
  • a written agreement needs to be made each time annual leave is cashed out
  • an employer can't force or pressure an employee to cash out annual leave
  • the payment for cashed out annual leave has to be the same as what the employee would have been paid if they took the leave.

Cashing out annual leave for award or agreement free employees

An award and agreement free employee can make an agreement with their employer to cash out their annual leave if the:

  • agreement is in writing
  • employer pays the employee the same amount the employee would get if they had taken the leave
  • employee has at least 4 weeks left in their leave balance after the rest is cashed out.

To find out how to check if an employee is award or agreement free, go to Award and agreement free wages and conditions.

Source reference:Fair Work Act 2009 s.92, 93 and 94

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