Cashing out annual leave means an employee receives payment instead of taking time off work.
Annual leave can only be cashed out when an award or registered agreement allows it.
Certain rules apply when cashing out annual leave:
- an employee needs to have at least 4 weeks annual leave leftover
- 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.
For example:
Restaurants
Employees can cash out annual leave under the Restaurant Award. To cash out annual leave they need to have:
- at least 4 weeks annual leave left after the cash out
- a signed written agreement with their employer that outlines the amount of leave being cashed out, the amount they will be paid and the date it will be paid. If the employee is under 18 their parent or guardian must also sign it.
Employers have to keep this agreement for the employee's records.
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.
An employee can't cash out more than 2 weeks each 12 months.
An employer can't force or pressure an employee to cash out annual leave.
Employers and employees can use the Cashing out annual leave template (DOCX 20.3KB) when cashing out annual leave.
Reference