The fourth of the Federal System’s National Employment Standards (NES) relates to Annual Leave.
The entitlement is four weeks’ Annual Leave (five weeks if the employee is a shift worker). Paid annual leave is accrued progressively during a year of service on the basis of ordinary hours worked. When one of your employees is on Annual Leave, you must pay them at their base rate of pay for their ordinary hours of work in the period.
Ordinary hours of work will be set out in any award or enterprise agreement. For award/enterprise agreement-free employees, ordinary hours of work will be the hours you agreed upon with your employee.
If you do not agree on the ordinary hours of work, then they will be the lesser of 38 hours or your employee’s usual hours of work.
Base rate of pay is your employee’s rate of pay for their ordinary hours of work and does not include loadings, monetary allowances, bonuses, overtime, penalty rates or any other specific amounts.
Under the NES you can require your employees to take annual leave so long as your requirement is reasonable, having regard to the needs of your employee and your business, your business’ custom and practice, any agreement you have with your employee, the notice you have given your employee and the timing of the leave.
We would expect it to be reasonable to require an employee to take leave if the employee has an excessive amount of paid Annual Leave and you give the employee reasonable notice of your requirement for them to take leave. We would also expect it to be reasonable to require an employee to take paid Annual Leave during a shut down between Christmas and New Year.
All of your employees can agree in writing to receive payment in lieu of Annual Leave (cashing out) provided an accrued balance of at least four weeks leave remains after the cashing out. There must be a separate written agreement in relation to each cashing out.
The NES commence on 1 January 2010, but any Annual Leave accrued prior to 1 January 2010 will be counted as being accrued under the NES.
I trust this has been of interest. If you have any questions, please do not hesitate to contact our Employment Law Team.