1
Fair Work Act 2009
s.156—4 yearly review of modern awards
4 yearly review of modern awards—Annual leave
(AM2014/47)
JUSTICE ROSS, PRESIDENT
SENIOR DEPUTY PRESIDENT HARRISON
COMMISSIONER HAMPTON MELBOURNE, 11 JUNE 2015
4 yearly review of modern awards - annual leave common issue - excessive annual leave -
cashing out of annual leave - close-down - granting leave in advance - payment of annual
leave entitlements on termination - electronic funds transfer and paid annual leave -
purchased leave.
CONTENTS
Chapters Page Paragraph
1. Introduction 3 [1]
2. The Context 4 [11]
3. The Evidence 11 [39]
4. The Claims 14 [59]
4.1 Excessive annual leave 14 [59]
4.2 Cashing out of annual leave 50 [220]
4.3 Annual Close-down 72 [336]
4.4 Granting leave in advance 79 [384]
4.5 Payment of annual leave entitlements on termination 87 [416]
4.6 Electronic funds transfer and paid annual leave 91 [430]
5. Purchased Leave 96 [458]
6. Next Steps 98 [467]
Attachments
A Employer Group Parties 112
B Index of Material 113
C Witness Statements 118
D New Subclause for Excessive Annual Leave 119
E Replacement Subclause for Excessive Annual Leave 119
F Analysis of Excessive Annual Leave Provisions in Awards 121
G New Subclause for Close-Down 127
H New Subclause for Annual Leave in Advance 129
I New Subclause for EFT Payment 131
J Legislative Provisions relating to Annual Leave 133
[2015] FWCFB 3406
DECISION
E AUSTRALIA FairWork Commission
2
ABBREVIATIONS
ABS Australian Bureau of Statistics
ACCI Australian Chamber of Commerce and Industry
Act Fair Work Act 2009 (Cth)
ACTU Australian Council of Trade Unions
AFPCS Australian Fair Pay and Conditions Standard
Ai Group Australian Industry Group
AIRC Australian Industrial Relations Commission
AMWU “Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union” known as the Australian
Manufacturing Workers’ Union (AMWU)
AWALI 2010 Australian Work and Life Index 2010
2008 Award Modernisation
decision
Award Modernisation decision of 19 December 2008 re
making of priority modern awards
CFMEU Construction, Forestry, Mining and Energy Union
Commission Fair Work Commission
EFT Electronic Funds Transfer
Employer Group See Group of employers listed at Attachment A
FWC Fair Work Commission
HILDA Household, Income and Labour Dynamics in Australia
survey
NAPSA Notional Agreement Preserving State Award
NES National Employment Standards
Review 4 yearly review of modern awards under s.156 of the
Fair Work Act 2009
SDA Shop, Distributive and Allied Employees Association
TAI 2002 The Australia Institute Survey, 2002
TCFUA Textile, Clothing and Footwear Union of Australia
Transitional Review Transitional (or 2 year) review of modern awards under
Item 6 of Schedule 5 to the Fair Work (Transitional
Provisions and Consequential Amendments) Act 2009
Transitional Review—Annual
Leave decision
Modern Awards Review 2012—Annual Leave decision
Work Choices Act Workplace Relations Amendment (Work Choices) Act
2005 (Cth)
WR Act Workplace Relations Act 1996 (Cth)
3
1. Introduction
[1] The Fair Work Act 2009 (Cth) (the Act) provides that the Fair Work Commission (the
Commission) must ensure that modern awards together with the National Employment
Standards (NES) provide a fair and relevant minimum safety net of terms and conditions.
Modern awards and the NES interact in different ways. A modern award may include any
terms that the award is expressly permitted to include by a provision of Part 2-2 of the Act
(which deals with the NES). A modern award may also include terms that are ancillary or
incidental to the operation of an entitlement of an employee under the NES or that supplement
the NES. One of the minimum standards in the NES is paid annual leave. This decision is part
of the 4 yearly review of modern awards and it deals with the variation of modern awards in
relation to a number of issues regarding paid annual leave.1
Background
[2] Section 156 of the Act provides that the Commission must conduct a 4 yearly review
of modern awards (the Review) as soon as practicable after 1 January 2014.
[3] As detailed in a statement issued on 6 February 2014,2 the Review consists of an
Initial stage, dealing with jurisdictional issues, a Common issues stage and an Award stage.
[4] What constitutes a “common issue” was defined in a statement issued on 17 March
20143 in terms of a proposal for a significant variation or change across the award system,
such as applications which seek to change a common or core provision in most, if not all,
modern awards. A matter identified as a common issue will be referred to a Full Bench for
determination in a “stand alone” proceeding, as distinct from having the issue determined on
an award-by-award basis during the Award stage of the Review. After a consultation process
the Commission determined the matters which would be dealt with as “common issues”
during the Review; one of those matters was annual leave. 4
[5] The scope of the matters to be considered in the context of the annual leave common
issue was published in a statement on 7 April 2014 as follows:
(i) cashing out of annual leave;
(ii) excessive annual leave;
(iii) annual close-down;
(iv) granting leave in advance;
(v) purchased leave;
(vi) payment of annual leave entitlements on termination; and
(vii) electronic funds transfer (EFT) and paid annual leave. 5
[6] This decision deals with the above matters.
[7] In relation to the issue of purchased leave, the Australian Industry Group (Ai Group)
initially proposed a model clause to be inserted into each modern award that would allow
employees additional annual leave in a year with a corresponding reduction in salary, either
for the period of their annual leave (such as half pay for twice the standard annual leave
period) or throughout the year.6 This claim was not pressed further during these proceedings
and we return to the matter later in this decision.
4
[8] Interested parties were directed to file proposed variation determinations and a list of
awards to which the proposed variations would apply. Directions were also issued regarding
the filing of comprehensive written submissions and any evidence to be relied upon in support
of the propositions advanced. Hearings took place on 20 and 21 August 2014, 16 October
2014 and 1 December 2014. Ai Group and the Australian Chamber of Commerce and
Industry (ACCI) coordinated discussions with various employer groups (the Employer
Group)7 and presented a common position in respect of proposed variations relating to each of
the matters addressed in this decision. The full list of organisations making up the Employer
Group is at Attachment A.
[9] A series of conciliation conferences took place in conjunction with the hearings
outlined above, but ultimately a consent position could not be reached and all of the matters
were contested.
[10] We propose to deal with some contextual issues first, before turning to the particular
claims before us.
2. The Context
[11] We begin by making some brief observations about the legislative context for the
Review. We note that these issues are canvassed in more detail in the 4 yearly Review of
Modern Awards: Preliminary Jurisdictional Issues decision8 and we adopt and apply that
decision.
[12] The Act provides that the Commission must conduct a 4 yearly review of modern
awards (s.156(1)). Section 156(2) deals with what has to be done in a Review:
“(2) In a 4 yearly review of modern awards, the FWC:
(a) must review all modern awards; and
(b) may make:
(i) one or more determinations varying modern awards; and
(ii) one or more modern awards; and
(iii) one or more determinations revoking modern awards; and
(c) must not review, or make a determination to vary, a default fund term of a
modern award.
Note 1: Special criteria apply to changing coverage of modern awards or revoking modern awards (see
sections 163 and 164).
Note 2: For reviews of default fund terms of modern awards, see Division 4A.”
[13] Subsections 156(3) and (4) deal with the variation of modern award minimum wages
in a Review and are not relevant for present purposes.
5
[14] Section 156(5) provides that in a review each modern award is reviewed in its own
right, however, this does not prevent the Commission from reviewing two or more modern
awards at the same time.
[15] The general provisions relating to the performance of the Commission’s functions
apply to the Review. Sections 577 and 578 are particularly relevant in this regard. In
conducting the Review the Commission is able to exercise its usual procedural powers,
contained in Division 3 of Part 5-1 of the Act. Importantly, the Commission may inform itself
in relation to the Review in such manner as it considers appropriate (s.590).
[16] The modern awards objective is central to the Review. The modern awards objective
applies to the performance or exercise of the Commission’s “modern award powers”, which
are defined to include the Commission’s functions or powers under Part 2-3 of the Act. The
Review function in s.156 is in Part 2-3 of the Act and so will involve the performance or
exercise of the Commission’s “modern award powers”. It follows that the modern awards
objective applies to the Review.
[17] The modern awards objective is set out in s.134 of the Act, as follows:
“134 The modern awards objective
What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National Employment
Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into
account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce
participation; and
(d) the need to promote flexible modern work practices and the efficient and
productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and
(e) the principle of equal remuneration for work of equal or comparable value;
and
(f) the likely impact of any exercise of modern award powers on business,
including on productivity, employment costs and the regulatory burden; and
6
(g) the need to ensure a simple, easy to understand, stable and sustainable modern
award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment
growth, inflation and the sustainability, performance and competitiveness of the
national economy.
This is the modern awards objective.
When does the modern awards objective apply?
(2) The modern awards objective applies to the performance or exercise of the FWC’s
modern award powers, which are:
(a) the FWC’s functions or powers under this Part; and
(b) the FWC’s functions or powers under Part 2–6, so far as they relate to modern
award minimum wages.
Note: The FWC must also take into account the objects of this Act and any other applicable
provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the
minimum wages objective also applies (see section 284).”
[18] The modern awards objective is directed at ensuring that modern awards, together
with the NES, provide a “fair and relevant minimum safety net of terms and conditions”
taking into account the particular considerations identified in paragraphs 134(1)(a) to (h). The
objective is very broadly expressed.9 The obligation to take into account the matters set out in
paragraphs 134(1)(a) to (h) means that each of these matters must be treated as a matter of
significance in the decision-making process.10
[19] No particular primacy is attached to any of the s.134 considerations and not all of the
matters identified will necessarily be relevant to a particular proposal to vary a modern award.
[20] There is a degree of tension between some s.134 considerations. The Commission’s
task is to balance the various considerations and ensure that modern awards, together with the
NES, provide a fair and relevant minimum safety net of terms and conditions.
[21] The modern awards objective requires the Commission to take into account, among
other things, the need to ensure a “stable” modern award system (s.134(1)(g)). The need for a
“stable” modern award system supports the proposition that a party seeking to vary a modern
award in the context of the Review must advance a merit argument in support of the proposed
variation. The extent of the merit argument required will depend on the variation sought. As
the Full Bench observed in the 4 yearly Review of Modern Awards: Preliminary
Jurisdictional Issues decision:
“Some proposed changes may be self evident and can be determined with little
formality. However, where a significant change is proposed it must be supported by a
submission which addresses the relevant legislative provisions and be accompanied by
probative evidence properly directed to demonstrating the facts supporting the
proposed variation.”11
7
[22] The Review is broader in scope than the transitional (or 2 year) review (Transitional
Review) of modern awards provided for in Item 6 of Schedule 5 to the Fair Work
(Transitional Provisions and Consequential Amendments) Act 2009, and is the first full
opportunity to consider the content of modern awards. However, the broad scope of the
Review does not obviate the need for a merit argument to be advanced in support of a
proposed variation. As the Full Bench in Re Security Services Industry Award 2010 recently
observed:
“[8] While this may be the first opportunity to seek significant changes to the terms of modern
awards, a substantive case for change is nevertheless required. The more significant the
change, in terms of impact or a lengthy history of particular award provisions, the more
detailed the case must be. Variations to awards have rarely been made merely on the basis of
bare requests or strongly contested submissions. In order to found a case for an award variation
it is usually necessary to advance detailed evidence of the operation of the award, the impact of
the current provisions on employers and employees covered by it and the likely impact of the
proposed changes. Such evidence should be combined with sound and balanced reasoning
supporting a change. Ultimately the Commission must assess the evidence and submissions
against the statutory tests set out above, principally whether the award provides a fair and
relevant minimum safety net of terms and conditions and whether the proposed variations are
necessary to achieve the modern awards objective. These tests encompass many traditional
merit considerations regarding proposed award variations.”12
[23] In the Review the Commission will proceed on the basis that prima facie the modern
award being reviewed achieved the modern awards objective at the time that it was made.13
The proponent of a variation to a modern award must demonstrate that if the modern award is
varied in the manner proposed then it would only include terms to the extent necessary to
achieve the modern awards objective (see s.138). What is “necessary” in a particular case is a
value judgment based on an assessment of the s.134 considerations having regard to the
submissions and evidence directed to those considerations.14
[24] In performing functions and exercising powers under a part of the Act (including Part
2-3—Modern Awards) the Commission must take into account the objects of the Act and any
particular objects of the relevant part (see s.578(a)). The object of Part 2-3 is expressed in
s.134 (the modern awards objective) to which we have already referred. The object of the Act
is set out in s.3 as follows:
“3 Object of this Act
The object of this Act is to provide a balanced framework for cooperative and productive
workplace relations that promotes national economic prosperity and social inclusion for all
Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible
for businesses, promote productivity and economic growth for Australia’s future economic
prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and
conditions through the National Employment Standards, modern awards and national
minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum
wages and conditions can no longer be undermined by the making of statutory individual
8
employment agreements of any kind given that such agreements can never be part of a fair
workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for
flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by
recognising the right to freedom of association and the right to be represented, protecting
against unfair treatment and discrimination, providing accessible and effective procedures to
resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective
bargaining underpinned by simple good faith bargaining obligations and clear rules governing
industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.”
[25] We now turn to the provisions of the Act relating to annual leave.
[26] As we have mentioned, the Act provides that modern awards, together with the NES,
are intended to provide a fair and relevant minimum safety net of terms and conditions of
employment. The NES are minimum standards that apply to the employment of national
system employees. The NES are set out in Part 2-2 of the Act. Division 6 of Part 2-2 (ss.86–
94) deals with annual leave.
[27] Part 2-1 of the Act provides that the NES cannot be excluded by modern awards or
enterprise agreements. Section 55 deals with the interaction between the NES and a modern
award or enterprise agreement:
“55 Interaction between the National Employment Standards and a modern award or
enterprise agreement
National Employment Standards must not be excluded
(1) A modern award or enterprise agreement must not exclude the National Employment
Standards or any provision of the National Employment Standards.
Terms expressly permitted by Part 2–2 or regulations may be included
(2) A modern award or enterprise agreement may include any terms that the award or
agreement is expressly permitted to include:
(a) by a provision of Part 2–2 (which deals with the National Employment
Standards); or
(b) by regulations made for the purposes of section 127.
Note: In determining what is permitted to be included in a modern award or enterprise agreement by
a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that
expressly prohibit certain terms must be taken into account.
(3) The National Employment Standards have effect subject to terms included in a
modern award or enterprise agreement as referred to in subsection (2).
9
Note: See also the note to section 63 (which deals with the effect of averaging arrangements).
Ancillary and supplementary terms may be included
(4) A modern award or enterprise agreement may also include the following kinds of
terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an
employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any
respect, when compared to the National Employment Standards.
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90,
an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the
number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or
paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay
(which is the rate required by sections 90 and 99).
Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms
requiring an employee to give more notice of the taking of unpaid parental leave than is required by
section 74.
Enterprise agreements may include terms that have the same effect as provisions of the
National Employment Standards
(5) An enterprise agreement may include terms that have the same (or substantially the
same) effect as provisions of the National Employment Standards, whether or not ancillary or
supplementary terms are included as referred to in subsection (4).
Effect of terms that give an employee the same entitlement as under the National Employment
Standards
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an
enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that
the terms give an employee an entitlement (the award or agreement entitlement) that is the
same as an entitlement (the NES entitlement) of the employee under the National
Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not
so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES
entitlement apply, as a minimum standard, to the award or agreement entitlement.
10
Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year,
the provisions of the National Employment Standards relating to the accrual and taking of paid annual
leave will apply, as a minimum standard, to 4 weeks of that leave.
Terms permitted by subsection (4) or (5) do not contravene subsection (1)
(7) To the extent that a term of a modern award or enterprise agreement is permitted by
subsection (4) or (5), the term does not contravene subsection (1).
Note: A term of a modern award has no effect to the extent that it contravenes this section (see
section 56). An enterprise agreement that includes a term that contravenes this section must not be
approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it
contravenes this section (see section 56).”
[28] A term of a modern award or enterprise agreement has no effect to the extent that it
contravenes s.55 of the Act.
[29] Relevantly, for the purpose of s.55(2), Part 2-2 provides that a modern award is
expressly permitted to include terms:
providing for the cashing out of annual leave (ss.93(1) and (2));
requiring an employee, or allowing for an employee to be required, to take paid
annual leave in particular circumstances, but only if the requirement is reasonable
(s.93(3)); and
otherwise dealing with the taking of paid annual leave (s.93(4)).
[30] We deal with these provisions later.
[31] A modern award may also include terms that are incidental or ancillary to the
operation of NES entitlements and terms that supplement the NES, provided that the effect of
those terms is not detrimental to an employee in any respect when compared to the NES
(s.55(4)).
[32] In dealing with matters arising in the Review, the Commission will have regard to the
relevant historical context and will take into account previous decisions relevant to any
contested issue. The particular context in which those decisions were made will also be
considered.
[33] The annual leave provisions in modern awards have been the subject of consideration
by the Commission and its predecessors over many years. On 30 May 2014, the Commission
released a background paper15 which sets out the legislative basis of the annual leave
provisions in modern awards and the history of annual leave entitlements in awards.
[34] During the award modernisation process conducted by the Australian Industrial
Relations Commission (AIRC) under Part 10A of the Workplace Relations Act 1996 (WR
Act) a number of employer organisations sought to have cashing out provisions included in
modern awards. The Award Modernisation Full Bench deemed that cashing out provisions
would “undermine the purpose of annual leave and give rise to questions about the amount of
annual leave to be prescribed”.16
[35] The substance of a number of the matters before us were also the subject of claims
during the Transitional Review.
11
[36] In the Modern Awards Review 2012—Annual Leave decision (Transitional Review—
Annual Leave decision)17 the Full Bench, by majority, rejected a range of applications to vary
the annual leave provisions in various modern awards. The majority’s decision turned on the
limited nature of the Commission’s task in the Transitional Review. The scope of the
Transitional Review was the subject of detailed consideration by a five member Full Bench in
the Modern Awards Review 2012 decision.18 The Full Bench said:
“To summarise, we reject the proposition that the Review involves a fresh assessment of
modern awards unencumbered by previous Tribunal authority. It seems to us that the Review
is intended to be narrower in scope than the 4 yearly reviews provided in s.156 of the FW Act.
In the context of this Review the Tribunal is unlikely to revisit issues considered as part of the
Part 10A award modernisation process unless there are cogent reasons for doing so, such as a
significant change in circumstances which warrants a different outcome. Having said that we
do not propose to adopt a “high threshold” for the making of variation determinations in the
Review, as proposed by the Australian Government and others.”19
[37] In the Transitional Review—Annual Leave decision the majority applied the above
statement and dismissed the applications.20
[38] Of course, as we have mentioned, this Review is broader in scope than the Transitional
Review and provides the first full opportunity to consider the content of modern awards.
3. The Evidence
[39] Ai Group, ACCI and other employer bodies conducted a joint employer survey in May
2014 about matters relating to annual leave (the Employer Survey).21
[40] The Ai Group’s submission notes that the scope of the Employer Survey was limited
to Ai Group, ACCI and affiliate organisation members.22 The survey instrument was
distributed by the employer organisations to their membership lists together with a covering
email which, in neutral terms, requested employers to complete the survey.23 Some 4137
employers responded to the survey, consisting of 3713 full responses and 424 incomplete
responses. Responses varied according to the survey question, with partial responses for
certain questions.24 The number of responses to the Employer Survey was significantly larger
than other employer surveys, such as the ACCI Small Business Survey, which only had
around 1500 responses.25
[41] The Australian Council of Trade Unions (ACTU) and a number of individual unions
advanced a number of criticisms of the Employer Survey, including:
it lacked methodological rigour;
the Employer Survey was not sent to a random, stratified population of employers
and so cannot be said to be representative of employers as a whole;
some of the questions were leading, in the sense that they suggested answers; and
on analysis, the responses to the Employer Survey did not support the contentions
advanced by the Employer Group.26
[42] The ACTU submitted that the Employer Survey should be given no weight in the
Commission’s consideration of the Employer Group’s claims.27
12
[43] There is some force to a number of the criticisms made of the Employer Survey.
[44] The Employer Survey is not a stratified random sample of the Australian business
population,28 nor does it purport to be.29 However, the Employer Survey was said to be
broadly representative of the population of employers in each state and territory.30 At least
one of the survey questions (Question 8) may be regarded as leading, but we do not regard
this as a substantive criticism. The questions predominantly allowed for objective responses
and, where a question appeared to assume a particular state of affairs, that was explained by
the sequencing of the questions. For example, Questions 5 and 6 asked:
“Since 1 January 2010, have any of your organisation’s employees asked to cash out a portion
of their annual leave? Choose one of the following answers.
Yes
No
Unsure”
“If yes, how many requests have you received?
1
2–5
5–20
20+”
[45] The Employer Survey was completed online and Question 6 was only asked if there
was an affirmative response to Question 5.31
[46] Some difficulty arises from the fact that the Employer Survey did not ask businesses
whether their workforce comprised employees to whom modern awards apply (or the extent
of use of modern award application in that workplace). As a consequence, it is difficult to
determine whether a response recorded by a business was in reference to an employee’s
modern award or enterprise agreement. For example, Question 8 of the Employer Survey
asked “... what has been the reason or reasons giving rise to the refusal [of a request to cash
out a portion of an employee’s annual leave]?” The respondent had four responses to
consider, with one response being “we were unable to agree because our award or agreement
does not permit ...” This response does not make clear whether a business was referring to a
modern award or enterprise agreement.
[47] Taking account of all these issues we are satisfied that the Employer Survey provides a
valuable insight into the practical issues facing employers in the management of the existing
annual leave arrangements and we will take the Employer Survey responses into account. The
Employer Survey utilised the available databases in order to maximise the number of
responses. A substantial number of responses were received (relative to other employment
surveys) and the respondents were reasonably representative of the population of employers
in each state and territory. The methodological limitations with the survey (i.e. it was not a
random stratified sample) mean that the results cannot be extrapolated such that they can be
said to be representative of all employers.
13
[48] In addition to the Employer Survey, various employer bodies and the “Automotive,
Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian
Manufacturing Workers’ Union (AMWU) tendered witness statements during the course of
the proceedings:
Ai Group Ms Kristina Flynn
Mr Ben Waugh
ACCI Ms Fiona Corbett
Mr Julian Frederick Arndt
Ai Group and ACCI Mr Eugene Kalenjuk
Accommodation Association of Australia Mr Stuart Lamont
Ms Nicki Passanisi
Ms Joyce Lawson
Restaurant & Catering Australia Mr David Murrie
Mr Antonio D’Arienzo
Master Builders Australia Limited Mr Geoffrey Charles Thomas
Housing Industry Association Ms Melissa Adler
AMWU Mr Warren Butler
[49] We propose to make some general observations about some of this evidence now and
we refer to it in more detail in our consideration of the particular claims.
[50] ACCI and Ai Group filed a joint expert accounting report by Mr Eugene Kalenjuk, a
partner at PricewaterhouseCoopers, which dealt with the financial impact of employees
accruing substantial leave balances.
[51] The evidence of Mr Ben Waugh related to the Employer Survey and the evidence of
Ms Kristina Flynn, Ms Fiona Corbett and Ms Melissa Adler dealt with issues raised by
employer members of their respective organisations.
[52] The statements of Mr Stuart Lamont, Ms Nicki Passanisi, Ms Joyce Lawson, Mr
David Murrie and Mr Antonio D’Arienzo (tendered by the Accommodation Association of
Australia and Restaurant & Catering Australia) were in the form of a common template and
all asserted that:
annual leave liability and excessive accrual of leave is an ongoing issue for their
respective companies;
they believe that the cashing out of annual leave would be beneficial for their
companies and employees; and
they support the applications by their respective organisations.
[53] Evidence of this character is of very little assistance. It is plainly in a template form
and expresses the witnesses’ belief as to the benefits of a cashing out provision, but not the
factual basis for that belief. Statements by five employers that they support the claims made
by their association on their behalf adds nothing to the substance of the arguments advanced
in support of the employer claims.
14
[54] A similar observation may be made about much of Mr Geoffrey Charles Thomas’
statement. Mr Thomas’ statement was largely in the form of a submission in support of the
claims sought by the Employer Group. He expressed a range of opinions said to be based on
his “experience as outlined in paragraph 1” of his statement, as follows:
“I make this statement based on my experience as an industrial relations practitioner in the
Departments of Navy (1973 to 1975) and Defence (1975 to 1985), the Australian Nuclear
Science and Technology Organisation (1988 to 1996) and the Master Builders Association of
New South Wales (1998 to 2013).”32
[55] This statement does not qualify Mr Thomas as an expert, in the sense of qualifying
him to give opinion evidence.
[56] The AMWU (Vehicle Division) filed two witness statements from Mr Warren Butler.
The majority of Mr Butler’s evidence related to close-down provisions and the manufacturing
and vehicle repair, service and retail industries.
[57] In addition to the Employer Survey and the witness evidence, the submissions referred
to other research relevant to the determination of the claims. We deal with this material later
in our consideration of the specific claims before us. We also note that during the course of
oral submissions a number of parties made a range of factual assertions from the bar table,33
which were challenged by other parties.34 We have not had regard to any of the challenged
assertions.
[58] We now turn to deal with each of the specific claims before us.
4. The Claims
4.1 Excessive annual leave
[59] The Employer Group sought to insert the following clause into 70 modern awards:
“Excessive Annual Leave
Despite anything else in this clause, an employer may direct an employee to take paid
annual leave if:
(a) the employee has accrued at least six (6) weeks of annual leave;
(b) the employer gives the employee four (4) weeks’ notice to take the annual
leave; and
(c) the employee retains at least four (4) weeks of accrued annual leave after the
direction is given by the employer.”35
[60] The ACCI and Ai Group submissions advanced a number of arguments in support of
their proposal. It is convenient to deal first with the propositions which relate to the various
matters the Commission must take into account pursuant to s.134(1) of the Act.
15
Promoting the efficient and productive performance of work (s.134(1)(d))
[61] ACCI relied on a number of research reports36 in support of the proposition that taking
annual leave is critical to preventing burnout and poor health37 and that such leave assists in
maintaining job safety and satisfaction.38 In addition to the academic research, ACCI relied on
a number of arbitral decisions which have accepted that the actual taking of leave increases
productivity as a result of a more balanced and rested workforce. It is contended that allowing
employers to direct the taking of annual leave “should ensure a more balanced, rested and
(accordingly) productive workforce”39 and that such an outcome advances the objectives of
s.134(1)(d).
The likely impact on business, including on productivity, employment costs and the
regulatory burden (s.134(1)(f))
[62] 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. ACCI submitted that:
“ By allowing employers to direct employees to reduce excessive leave accruals, the model
clause reduces the regulatory burden on employers. It allows employers to positively manage
their finances, allowing for investment in other profit-generating aspects of a business.”40
[63] It was contended that allowing employers to direct employees to reduce excessive
leave accruals by taking leave advances the objectives of s.134(1)(f).
A simple, easy to understand, stable and sustainable modern award system (s.134(1)(g))
[64] ACCI submitted that prior to 2006 (when the responsibility for annual leave broadly
shifted to the federal jurisdiction) employers had the ability to direct employees to take annual
leave, subject to adequate notice (said to be “typically but not invariably two weeks”).41 On
this basis ACCI advanced the following submission:
“7.26 There is no indication on the face of the FW Act or elsewhere that Parliament intended to
depart from this prevailing position. Rather, and as discussed at section 4 above, it should be
understood from the structure of Division 6 of Part 2-2 of the FW Act that Parliament expected
the Commission to establish industry-specific machinery in awards to allow for the continued
directing of annual leave by employers (particularly where agreement cannot be reached for
the taking of leave).
7.27 The history that has allowed employers to direct employees to take excessive annual
leave suggests that the Australian population generally has an appreciation and understanding
of this machinery within industrial regulation. It is not a concept that would be confusing or
difficult for the population to adapt to. Rather, it has been in existence for the majority of
recent history.
7.28 In such circumstances, allowing employers to direct employees to take excessive annual
leave does not conflict with section 134(1)(g) and, in many ways, advances the objectives of
the section.”42
[65] It was also submitted that granting the Employer Group’s claim would reduce the
potential for disputes about the taking of annual leave.
16
Employment growth and the sustainability, performance and competitiveness of the
national economy (s.134(1)(h))
[66] ACCI submitted that granting the Employer Group’s claim would advance the
objectives of s.134(1)(h) by reducing the regulatory burden on employers and through the
positive impact the increased taking of leave will have on the Australian tourism industry:
“7.29 For the reasons already outlined at paragraphs 7.16 to 7.23, the model clause will reduce
the regulatory burden on businesses and allow them to divert funds currently set aside for
excessive leave accruals to profit generating investments.
7.30 Additionally, however, compelling employees to take leave is directly supportive of a
major industry within the economy – Australian tourism. If employees take leave, one of the
most likely outcomes is that such employees will travel on holidays. Although some travel
may occur overseas, one of the key beneficiaries of employee travel will likely be the
Australian tourism industry. It is for this reason that Tourism Australia is currently running a
campaign, ‘No Leave No Life’, encouraging employees to take their annual leave. Campaign
materials have been filed as ACCI Exhibit D.”43
[67] In addition to the submissions set out above, Ai Group pointed to the fact that the Act
places no restriction on the time period during which accrued annual leave entitlements must
be taken:
“This means that, absent an award provision, many employees may simply elect to perpetually
accrue their annual leave and only ever receive the benefits of the entitlement as a payment on
termination.”44
[68] Ai Group submitted that granting the Employer Group’s claim would encourage
employees to take their accrued leave consistent with the traditional justification for annual
leave entitlements:
“It is trite to observe that taking a break through a period of annual leave will have benefits for
employees and for their families. However, it will also have positive effects for businesses
such as increased productivity and workforce morale, and reduced work health and safety
risks.”45
[69] The ACTU accepted that it was desirable that employees take, rather than excessively
accrue, their entitlement to paid annual leave:
“We strongly agree that employees should be taking leave for their rest and recreation and also
for occupational health and safety reasons ... It is clear that employees should be taking leave:
it is beneficial for them personally but also it makes them more productive employees and
reduces the risk of workplace illness.”46
[70] However, the ACTU opposed the Employer Group’s claim—both at a conceptual level
and in relation to the elements of the model term proposed.
[71] At a conceptual level, the ACTU submitted that the problem of excessive annual leave
accruals “substantially lies not with employees seeking to hoard annual leave, but rather that
despite section 88 of the FW Act, employers are unwilling to grant annual leave at times that
suit the employee”.47 The ACTU submitted that employers should not have “the ultimate or
17
default say in when annual leave is taken”48 and that the Employer Group’s model term was
unlikely to achieve its objectives:
“The proposed clause is unlikely to achieve the benefits espoused by the employer groups
because it fails to provide an employee with any autonomy as to when they take their annual
leave. 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.”
49
[72] While the ACTU criticised the model advanced by the Employer Group it did not
advance any viable alternative means of addressing the problem of excessive accruals of paid
annual leave. The ACTU did, however, propose a number of “additional safeguards” in the
event that the Commission was minded to adopt an excessive leave term.50 We have had
regard to these submissions, and the employer submissions in reply, in framing a proposed
model clause.
[73] As to the particular elements of the Employer Group’s model clause, the ACTU
advanced the following criticisms:
the proposed model clause fails to include any obligation on an employer to first
seek to reach agreement with an employee before directing that a period of accrued
leave be taken;51
six weeks’ annual leave is not an excessive accrual52, and two years of accrued leave
was proposed as a definition of “excessive” accrued leave53; and
four weeks’ notice is inadequate for an employee to get his or her affairs in order to
take a period of paid annual leave54 and at least eight weeks’ notice is required.55
[74] While there is some force in the ACTU’s criticisms, they ultimately go to the content
of any model term rather than mounting a persuasive case that it is not appropriate to make
any variations to modern awards to address the problem of excessive accruals of paid annual
leave.
[75] We propose to deal with the relevant historical and legislative context first before
turning to the merits of the claim.
[76] Prior to the commencement of the NES and modern awards, federal and state
legislation and awards commonly provided employers with a right to direct employees to take
annual leave.
[77] For example, the pre-modern Metal, Engineering and Associated Industries Award
1998 provided:
“7.1.9 Time of taking leave
7.1.9(a) Annual leave shall be given at a time fixed by the employer within a period
not exceeding six months from the date when the right to leave accrued.
7.1.9(b) An employer can require an employee to take annual leave by giving not less
than four weeks’ notice of the time when such leave is to be taken.
18
7.1.9(c) By agreement between an employer and an employee, annual leave may be
taken at any time provided it is done within two years from the date when the right to leave
accrued.”
[78] In New South Wales, s.3 of the Annual Holidays Act 1944 (NSW) provides:
“(4) The annual holiday shall be given by the employer and shall be taken by the worker before
the expiration of a period of six months after the date upon which the right to such holiday
accrues: Provided that the giving and taking of the whole or any separate period of such annual
holiday may, with the consent in writing of the Industrial Registrar, or Deputy Industrial
Registrar appointed under the Industrial Relations Act 1996, be postponed for a period to be
specified by such Registrar in any case where he or she is of opinion that circumstances render
such postponement necessary or desirable. ...
(6)(a) The employer shall give each worker at least one month’s notice of the date from
which the worker’s annual holiday shall be taken.”
[79] The capacity to postpone a period of annual leave by application to the Industrial
Registrar, envisaged by s.3(4) of the Annual Holidays Act 1944 (NSW), is rarely utilised.56
[80] Section 12 of the Queensland Industrial Relations Act 1999 deals with taking of
annual leave:
“12 Taking annual leave
(1) An employee and employer may agree when the employee is to take annual
leave.
(2) If the employee and employer cannot agree, the employer —
(a) may decide when the employee is to take leave; and
(b) must give the employee at least 14 days written notice of the starting
date of the leave.”
[81] A joint Ai Group, ACCI and ACTU document setting out the legislative provisions
relating to annual leave in the WR Act and relevant state and territory legislation is at
Attachment J (the Joint Exhibit).57
[82] The Workplace Relations Amendment (Work Choices) Act 2005 (Work Choices Act)
shifted the vast majority of the workforce58 to the federal system and introduced a statutory
set of minimum conditions, the Australian Fair Pay and Conditions Standard (the AFPCS),
which applied to all federal system employees. The Work Choices Act also inserted s.16(1)
into the WR Act which, relevantly for present purposes, had the effect of excluding any state
or territory law which dealt with annual leave. Section 16(1) had the effect of creating an
“exclusion zone”59 for federal system employers and employees from the operation of state
and territory annual leave laws.
[83] The AFPCS is a legislative antecedent to what is now the NES. Section 236 of the WR
Act dealt with the taking of leave, as follows:
19
“236 Rules about taking annual leave
General rules
(1) Subject to this section and section 233, an employee is entitled to take an amount of
annual leave during a particular period if:
(a) at least that amount of annual leave is credited to the employee; and
(b) the employee’s employer has authorised the employee to take the annual leave
during that period.
(2) To avoid doubt, there is no maximum or minimum limit on the amount of annual leave
that an employer may authorise an employee to take.
(3) Any authorisation given by an employer enabling an employee to take annual leave
during a particular period is subject to the operational requirements of the workplace or
enterprise in respect of which the employee is employed.
(4) An employer must not unreasonably:
(a) refuse to authorise an employee to take an amount of annual leave that is
credited to the employee; or
(b) revoke an authorisation enabling an employee to take annual leave during a
particular period.
Shut downs
(5) An employee must take an amount of annual leave during a particular period if:
(a) the employee is directed to do so by the employee’s employer because, during
that period, the employer shuts down the business, or any part of the business, in
which the employee works; and
(b) at least that amount of annual leave is credited to the employee.
Extensive accumulated annual leave
(6) An employee must take an amount of annual leave during a particular period if:
(a) the employee is directed to do so by his or her employer; and
(b) at the time that the direction is given, the employee has annual leave credited
to him or her of more than 1/13 of the number of nominal hours worked by the
employee for the employer during the period of 104 weeks ending at the time that the
direction is given; and
(c) the amount of annual leave that the employee is directed to take is less than, or
equal to, ¼ of the amount of credited annual leave of the employee at the time that the
direction is given.”
[84] The Explanatory Memorandum to the Workplace Relations Amendment (Work
Choices) Bill 2005 states:
20
“533. Section 92H(6) [which became s.236] would enable an employer to direct an
employee to take a period of paid annual leave if the employee has an annual leave credit
greater than 1/13 of the number of nominal hours worked over a two year period (an amount
equivalent to 8 weeks for an employee working 38 hours per week over that period). In this
situation, the employer may direct the employee to take up to ¼ of his or her annual leave
credit. The intention of this provision is to ensure that:
employees regularly take periods of leave for rest and recreation, and
employers are not required to pay out excessive untaken leave accruals when an employee’s
employment ends.
Illustrative Example
Lucas has been employed by Chocolates Galore Pty Ltd for four and a half years, working
38 nominal hours each week. In that time, he has accrued 684 hours (the equivalent of
90 days) of annual leave, of which he has taken 228 hours (the equivalent of 30 days), leaving
a balance of 456 hours (or 60 days).
As Lucas enjoys his job he’s only ever taken a week or two of his annual leave each year to go
surfing.
Lucas’s current balance of annual leave is more than 304 hours (or 40 days), which is what he
would normally accrue over a 24 month period.
In this case, his employer could direct him to take up to one quarter (or 76 hours) of his
accrued annual leave balance.”
[85] Section 236(6) of the WR Act provided that an employer could direct an employee to
take an amount of annual leave during a particular period if the employee had “extensive
accumulated annual leave”. “Extensive accumulated annual leave” was defined by s.236(6)(b)
and generally amounted to eight weeks’ accrued leave for full-time employees. There was no
notice requirement for an employer directing an employee to take excessive leave, but there
was a limit to the quantum of leave that the employee could be directed to take, being 25 per
cent of the employee’s balance. So if an employee had eight weeks’ accrued leave the
employee could be directed to take up to two weeks’ leave.
[86] We now turn to the relevant provisions of the Act.
[87] The Act does not require an employee to take their accrued paid annual leave within
any particular timeframe. Section 88, which deals with the taking of annual leave, states:
“88 Taking paid annual leave
(1) Paid annual leave may be taken for a period agreed between an employee and his or
her employer.
(2) The employer must not unreasonably refuse to agree to a request by the employee to
take paid annual leave.”
[88] Sections 93 and 139(1) are relevant insofar as they deal with the terms which may be
included in a modern award.
21
[89] Subsections 93(3) and (4) of the Act are relevant in the context of this claim and
provide as follows:
“Terms about requirements to take paid annual leave
(3) A modern award or enterprise agreement may include terms requiring an employee, or
allowing for an employee to be required, to take paid annual leave in particular circumstances,
but only if the requirement is reasonable.
Terms about taking paid annual leave
(4) A modern award or enterprise agreement may include terms otherwise dealing with
the taking of paid annual leave.” (emphasis added)
[90] Section 139(1)(h) provides that a modern award may include terms about any of the
following matters:
“(h) leave, leave loadings and arrangements for taking leave.” (emphasis added)
[91] Subject to the requirement to take leave being reasonable, it seems to us that a modern
award term which provides that an employee can be required to take a period of annual leave
to reduce the employee’s excessive level of accrued paid annual leave is a term of the type
contemplated by s.93(3) of the Act. We are fortified in this conclusion by the terms of the
Explanatory Memorandum to the Fair Work Bill 2008 which states:
“381. Subclause 93(3) permits terms to be included in an award or agreement that require an
employee, or that enable an employer to require or direct an employee, to take paid annual
leave in particular circumstances, but only if the requirement is reasonable. This may include
the employer requiring an employee to take a period of annual leave to reduce the employee’s
excessive level of accrual or if the employer decides to shut down the workplace over the
Christmas/New Year period.
382. In assessing the reasonableness of a requirement or direction under this subclause it is
envisaged that the following are all relevant considerations:
the needs of both the employee and the employer’s business;
any agreed arrangement with the employee;
the custom and practice in the business;
the timing of the requirement or direction to take leave; and
the reasonableness of the period of notice given to the employee to take leave.”
[92] As to s.93(4), the words “otherwise dealing with the taking of annual leave” (emphasis
added) is a reference to a term for dealing with the taking of annual leave other than a term of
the type contemplated by s.93(3). The relevant extract from the Explanatory Memorandum
provides as follows:
“Subclause 93(4) enables an award or agreement to include other terms about the taking of paid
annual leave – e.g., the taking of paid annual leave in advance of accrual.”60
22
[93] We also note that different arrangements apply in relation to award/agreement free
employees. Subsections 94(5) and (6) provide as follows:
“Requirements to take paid annual leave
(5) An employer may require an award/agreement free employee to take a period of paid
annual leave, but only if the requirement is reasonable.
Note: A requirement to take paid annual leave may be reasonable if, for example:
(a) the employee has accrued an excessive amount of paid annual leave; or
(b) the employer’s enterprise is being shut down for a period (for example, between
Christmas and New Year).
Agreements about taking paid annual leave
(6) An employer and an award/agreement free employee may agree on when and how
paid annual leave may be taken by the employee.
Note: Matters that could be agreed include, for example, the following:
(a) that paid annual leave may be taken in advance of accrual;
(b) that paid annual leave must be taken within a fixed period of time after it is accrued;
(c) the form of application for paid annual leave;
(d) that a specified period of notice must be given before taking paid annual leave.”
[94] The award modernisation process conducted by the AIRC under Part 10A of the WR
Act also provides part of the historical context. The process took place from April 2008 to
December 2009 and was conducted in accordance with a written request (the award
modernisation request) made by the Minister for Employment and Workplace Relations to the
President of the AIRC. The award modernisation process was completed in four stages, each
stage focussing on different industries and occupations. All stakeholders and interested parties
were invited to make submissions on what should be included in modern awards for a
particular industry or occupation. Separate processes, including the provision of submissions,
hearings and release of draft awards, were undertaken in respect of the creation of each
modern award to ensure parties were able to make submissions and raise matters of concern in
relation to particular awards. By the end of 2009 the AIRC had reviewed more than 1500 state
and federal awards and created 122 industry- and occupation-based modern awards.
[95] In its 19 December 2008 Award Modernisation decision (2008 Award Modernisation
decision), the Award Modernisation Full Bench made some observations about the right of an
employer to direct an employee to take accrued leave, as set out below:
“[95] As we noted in our statement of 12 September 2008, it has not been possible to develop a
single model clause for annual leave. While some parties have sought greater uniformity in the
area, there is a wide range of differing provisions in the awards and NAPSAs that we are
dealing with. In many cases the provisions are more generous to employees than the provisions
of the NES. Areas in which this can be observed are the quantum of holiday pay, leave loading
and the definition of shift worker. In considering what should be included in the modern award
on each of these matters we have attempted to identify or formulate a standard entitlement in
the area covered by the modern award rather than preserving a range of differing entitlements.
23
This involves a degree of rationalisation at the award level only and will not result in standard
provisions across all awards.
[96] There are also some issues concerning the time of taking leave. The time of taking leave
is referred to in para.33 of the consolidated request and s.36(1)(b) of the NES. Section
36(1)(b) reads:
‘36 Modern awards may include certain kinds of provisions
(1) A modern award may include provisions of any of the following kinds:
…
(b) provisions requiring an employee (or allowing for an employee to be required)
to take paid annual leave in particular circumstances;
...’
[98] One issue that has arisen repeatedly, and is provided for in the NES, is the right of an
employer to require that an employee take arrears of annual leave. We think that an employer
should have the ability to reduce annual leave liability by compelling employees to take
annual leave provided appropriate notice is given. While there may be different approaches to
this question, in each of the awards there will be some provision which will give the employer
the ability to take action to reduce arrears.”61
[96] In 2010, the Award Modernisation Full Bench considered seven applications to vary
the General Retail Industry Award 2010.62 In relation to excessive leave, it considered an
application by the Shop, Distributive and Allied Employees Association (SDA) which sought
to limit the ability of an employer to compel an employee to take leave where more than eight
weeks’ leave had accrued.63 The Full Bench dismissed the application stating that the SDA
had not made an appropriate case to support the application.64
[97] The Full Bench also considered three applications to vary the Fast Food Industry
Award 2010.65 One application, which was jointly filed by the National Retail Association
Ltd and Ai Group, sought to include a provision permitting an employer to direct an employee
to take annual leave where more than eight weeks’ leave was accrued. The SDA opposed the
variation.66 The Full Bench denied the application to vary the award to include a provision in
relation to excessive leave on the grounds that no history of such provisions had been
established and the variation was opposed.67
[98] At present, 79 modern awards contain excessive leave provisions.68 We deal with
these provisions and the awards that the Employer Group is seeking to vary later in our
decision.
[99] We now turn to the merits of the Employer Group’s claim. We deal first with the
extent to which employees do not utilise their full paid leave entitlement and the issues
associated with the accrual of “excessive leave”.
[100] The evidence clearly establishes that most employees accrue a portion of their paid
annual leave entitlement and that a significant proportion of employees have six weeks or
more of such accrued leave.
24
[101] A paper by Skinner and Pocock examined, among other things, the utilisation of paid
leave and the reasons why employees did not utilise their full paid entitlement.69 It presents
data which is a subset of the Australian Work and Life Index 2010 (AWALI 2010) survey.
The AWALI 2010 survey is a national stratified random survey of 2803 Australian workers
conducted using computer assisted telephone interviews over four weekends in March and
April 2010. The survey asked questions about the use of paid annual leave in 2009. The
authors’ study replicates and extends a study conducted by The Australia Institute in 2002
(TAI 2002) on Australian’s uptake of paid leave.70
[102] Skinner and Pocock found that in 2009, only 40.3 per cent of full-time employees used
all of their paid leave, leaving about 60 per cent who had not taken some portion of their
leave. Similar results were obtained in the TAI 2002 survey (only 38.8 per cent of employees
used all their paid leave).
[103] As shown in Table 1, women and men reported that they utilised their full leave
entitlement at similar levels. As to the uptake of leave by reference to employee
circumstances, Skinner and Pocock noted:
“Uptake of leave, or the lack thereof, is consistent across family type, life stage and household
income, although there are some differences in the rate of leave uptake, with more of those
who are older, single parents and middle-income earners using all of their leave (data available
upon request). It is interesting to note that the presence of children under 18 is not associated
with a higher rate of leave use.”71
Table 1: Used all paid leave by gender, age and parenting status, AWALI 2010 and
TAI 2002
AWALI 2010 TAI 2002
Men
(%)
Women
(%)
All
(%)
Men
(%)
Women
(%)
All
(%)
All 41.0 39.2 40.3 37.7 41.2 38.8
Age
18–24 years 34.3 37.3* 35.3 - - -
25–34 years 40.1 31.9 37.5 - - 37.2
35–49 years 41.1 42.9 41.7 - - 35.8
50–59 years 45.6 43.6 44.6 - - 50.2
60+ years 44.9 38.5 43.2 - - -
Parenting responsibility
Children 18 years 40.5 39.6 40.3 - - 43.5
No Children 18 years 41.4 38.9 40.3 - - 35.7
Household composition
Single parent 57.9* 42.9* 47.5 - -
Couple with children 41.7 40.4 41.5 - -
Couple without children 40.7 41.0 40.8 - -
Single without children 42.0 36.0 40.0 - -
Household income
$30,000 ** ** ** - - **
$30,000–$59,999 44.2 39.6 42.5 - - 42.1
$60,000+ 40.1 39.0 39.7 - - 38.5
25
Notes: *Estimates unreliable due to insufficient sample size; **Estimate not provided due to inadequate sample size “-” data not available.
TAI data only included those aged 25–59 years.
Source: Skinner N and Pocock B (2013), ‘Paid annual leave in Australia: Who gets it, who takes it and implications for work-life
interference’, Journal of Industrial Relations 55(5), p.686.
[104] The Skinner and Pocock findings are consistent with three other research papers72 and
the results from the Employer Survey.
[105] Wooden and Warren reported on the extent of usage of paid annual leave in Australia
using new data collected in Wave 5 of the Household, Income and Labour Dynamics in
Australia (HILDA) survey, and concluded that the majority of employees do not take their full
annual leave entitlement each year.73
[106] The HILDA survey is a household panel survey that began in 2001, with a large
nationally representative sample of Australian households. All members of responding
households from Wave 1 form the basis of the panel to be followed over time, though
interviews are only conducted with persons aged 15 years or older. The data on annual leave
comes from responses to two questions. The first identifies whether a respondent has spent
any time on paid annual leave during the 12 months preceding the interview. All persons
answering in the affirmative are then asked how many days (or weeks) they spent on paid
annual leave during that 12 month period. These questions were included for the first time in
Wave 5 and so we only have information about patterns of leave usage over a single one year
period.
[107] Table 2 presents summary statistics on both the proportion of workers taking any paid
annual leave and the average number of days taken by persons employed at the date of
interview. The table shows that just over half of all employed persons took at least one day of
paid annual leave during the one year reference period and on average, just nine days of
annual leave were taken.
Table 2: Paid annual leave by current employment status, HILDA survey Wave 5
Employment status % taking any
paid leave
Mean leave
days
Mean leave days taken
by those who took leave
Employees 60.2 10.0 16.7
Employees of own business 39.9 6.9 17.4
Own account workers 12.4 1.7 14.0
All employed 53.8 8.9 16.6
Source: Wooden M and Warren D (2008), ‘Paid Annual Leave and Working Hours: Evidence from the HILDA Survey’, Journal of
Industrial Relations 50(4), p.666.
[108] Table 2 shows that a large proportion of employees did not take any paid annual leave
in the one year reference period, and that average leave usage was only half of the entitlement
of most full-time employees (i.e. four weeks). But, as Wooden and Warren noted, the data
presented in the above table does not provide a good guide to how usage of leave compares
with entitlements.74 There are a number of reasons for this, including that: over one-quarter of
the employee workforce are employed on a casual basis and so do not have any annual leave
entitlements; part-time employees will typically be entitled to less than 20 days’ paid annual
leave; and some workers covered by the data in Table 2 will have been employed with their
current employer for less than one year and so will not have accrued four weeks’ leave.
26
[109] A better guide to the extent to which leave entitlements are being used is provided by
focusing on the sub-sample of employees who state that their employer provides them with
paid annual leave, they have been employed with their current employer for at least one year,
and report usual weekly working hours of 35 or more. Wooden and Warren stated that almost
90 per cent of this group reported taking at least one day of paid annual leave during the year,
with the mean leave taken being 16.1 days. Further information on the pattern of leave usage
for this group is provided in Chart 1, which reveals a wide distribution around the mean.
Chart 1: Distribution of paid annual leave days—Full-time employees with leave
entitlements and at least one year’s service
Source: Wooden M and Warren D (2008), ‘Paid Annual Leave and Working Hours: Evidence from the HILDA Survey’, Journal of
Industrial Relations 50(4), pp.667.
[110] On the basis of the data set out in Chart 1, Wooden and Warren concluded as follows:
“While 20 days (or 4 weeks) is the most common response, the majority (63%) reported taking
less than 20 annual leave days during the year.”75
[111] Cameron and Denniss report on the results of a survey conducted by the Australian
Institute and beyondblue. The relevant aspects of their findings and conclusions are set out
below:
“Over half of the respondents (52 per cent), equating to six million workers, did not take all
their leave in 2012. Higher earners, with incomes over $80,000, are less likely to take all their
leave and those in large workplaces (with more than 100 employees) are less likely to take
their full annual leave: 69 per cent of respondents working in organisations of 100–200
employees and 59 per cent in organisations with more than 200 employees, compared to an
average 48 per cent of respondents across all other workplaces. It is worth noting, however,
that half of respondents in all workplaces with up to 100 employees reported that they did not
take all their annual leave entitlement in 2012.”76
[112] ACCI also tendered material produced by Tourism Australia for the “No leave, No
life” campaign. This material included research findings—about annual leave accrual in
Australia. For the purpose of this research, “leave stockpilers” were defined as employees
27
with 25 days or more of accrued annual leave. The “Key Facts” reported from the research are
set out below:
“Key Facts
1. Australia has 129 million days of accrued annual leave by full-time employees. This
equates to $33.3 billion in wages as of September 2011 (Roy Morgan Research)
2. Annual leave accrual by full-time employees has grown by 11% from December 2006
to December 2008 (Roy Morgan Research)
3. Annual leave accrual is endemic across all sizes of business and industries. No
business is too big or small to feel the impact of accrued leave. Annual leave stockpiling has
become entrenched workplace behaviour potentially affecting every business regardless of
size or type
4. 1 in 4 of Australian full-time employees are leave stockpilers (Roy Morgan Research)
5. 73% of stockpilers consider work/life balance (WLB) an important aspect of their life
Female stockpilers place greater importance on WLB [80%] compared to males
[69%]
6. 70% of stockpilers agree that annual leave positively impacts work/life balance
(WLB)
Stronger amongst females (78%) than males (67%)
7. Only 56% of stockpilers believe that their employer is generally supportive of leave
taking
Highest amongst government employees [60%] and lowest amongst SME
(49%)
Stockpilers who believe their employer is supportive of leave-taking have
higher intention to take an Australian holiday [64%) than those who do not
(51%)
8. 80% of stockpilers cite personal barriers to leave-taking
Availability of funds is the biggest concern (40%)
Fitting around partner’s availability is also difficult (28%)
Deliberate accrual for emergencies (26%) or big trip (24%) is third most
common reason
9. 57% of stockpilers consider work related barriers prevent them from taking leave
compared to 48% of non stockpilers
Concern about workload before and after leave is the main barrier (30%)
Lack of resources for cover is second (26%)
Difficulty of scheduling leave when desired [21%] or around projects (21%)
rank third
10. Stockpilers’ strongest perceived benefits of annual leave are passive in nature
Relaxation (75%)
Quality time with family and friends (73%)
Long term health (69%)
11. Females are more likely to have sole responsibility for decisions about leave taking
(47%) compared to males (34%)
28
12. Whilst over half of leave stockpilers are employed in private industry, employees in
the public sector are more likely to accrue leave than their private sector counterparts.”
[113] The Tourism Australia material tendered provides little information about the
methodology used and for that reason we do not place much weight on the above findings,
other than to note that they are consistent with the other research.
[114] The data from the Employer Survey show similar results to that in the research to
which we have referred. Questions 11–14 of the Employer Survey are directed at the issue of
excessive leave accrual. We deal with Questions 12–14 later; Question 11 was as follows:
“11. What percentage of your employees have annual leave balances of 6 or more weeks:
none
1–20%
21–50%
51–70%
70%+
Unsure”
[115] Some 2552 employers (about 68 per cent of all responses) had at least one employee
with an accrued paid annual leave balance of six weeks or more. Of these employers, 683
reported that over 20 per cent of their employees had accrued paid annual leave balances of
six weeks or more.77
[116] The evidence canvassed above (at paragraphs [99]–[115]) supports the following
findings:
(i) most employees do not use their full paid annual leave entitlement (the NES
provides that non-casual employees are entitled to four weeks’ paid annual leave
(shiftworkers as referred to in s.87(1) are entitled to five weeks)); and
(ii) the lack of annual leave utilisation is broadly consistent across family type, life
stage and household income; and
(iii) a significant proportion of employees have six weeks or more accrued annual
leave.
[117] As we have mentioned, the purpose of annual leave is to provide employees with a
period of rest and recreation. A corollary of excessive accrual of annual leave is that
employees are not receiving the benefit for which the leave was intended. In the proceedings
before us it was generally accepted that not taking a reasonable portion of leave can give rise
to a serious threat to the health and safety of the employees concerned. This consensus is
reflected in the academic research.
[118] Skinner and Pocock cite existing research which suggests that not taking paid leave
represents a serious risk to the health and wellbeing of the employees concerned and they
summarised the relevant research in the following terms:
“There is also a physiological and psychological need for opportunities for rest and recovery
from periods of sustained daily and weekly effort at work (Van Hooff et al., 2007).
29
The issue of paid annual leave is less frequently discussed in working time research and in
wider public policy discourse. Longer breaks from work in the form of paid leave are a crucial
aspect of working time that have significant implications for health and well-being. Breaks
from work of more than a day or two provide the opportunity for more substantial rest and
recovery from work demands than a lunch break, evening at home or weekend can provide
(Trenberth and Dewe, 2002). This is especially the case in typically busy dual-earner or sole-
parent/-worker households, in which weekdays and weekends are often busy and tightly
scheduled, and especially so for parents.
Not taking paid leave is a serious threat to health. Middle-aged men at risk of cardiovascular
disease significantly reduce their risk of death from this disease and other causes when they
take more annual vacations (Gump and Matthews, 2000). In a large longitudinal cohort study
of healthy women, it was found that infrequent vacations and tension increase the risk of both
heart attack and coronary death (Eaker et al., 1992). Paid leave often provides greater
opportunities to engage in enjoyable and meaningful leisure activities, which have been shown
to be an effective therapy for depression, anxiety and burnout.”78
[119] The adverse impact of not taking annual leave is canvassed by Cameron and Denniss
who state that the results of the survey they conducted indicate a strong correlation between
work-related stress and anxiety and not taking leave breaks:
“... respondents who did not take all their annual leave in 2012 were markedly more likely to
report having negative feelings about work than those who did take all their leave
entitlement.”79
[120] Chart 2 shows that of the group who did not take their full leave entitlement, 39 per
cent felt stressed about work; 28 per cent felt anxious; 24 per cent were worried and 21 per
cent were overwhelmed by their work. By comparison, of those who did take their full annual
leave, 29 per cent were stressed; 24 per cent were anxious; 17 per cent were worried and 14
per cent felt overwhelmed by their work.
Chart 2: Taking full annual leave and feelings about work
Source: Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-entering the Australian
workforce’, The Australia Institute, Institute Paper No. 13, November 2013 at p. 27.
60 50 - 40 % 30 20 Didn't take all leave 10 Did take all leave 0 Stressed Anxious Worried Overwhelmed No negative feelings
30
[121] Cairncross and Waller surveyed the implications of employees working longer hours
and not taking their full annual leave entitlements. The authors expressed some tentative
conclusions and identified a need for further research:
“In light of the data pertaining to the impost on the Australian economy of workplace accidents
and occupational stress, it is currently guesswork to surmise what the benefits may be of
holidays in terms of increased productivity and decreased accident and illness costs in
Australia. However, it is reasonable to assume given the value of a holiday to the tourism and
hospitality industry (Bureau of Tourism Research), and the physical (Dennis 2003) and
psychological costs of long working hours (Bent 1998) together with the value of a holiday in
reducing stress (Etzion 2003), there is value in further research establishing the true economic
value of taking full annual leave entitlement each year. ...
The examination of the literature suggests that in-depth research is required into the
psychological and economic reasons for Australians not taking their holidays Etzion (2003),
for example, has established that people who take their leave are more productive and exhibit
fewer symptoms of workplace stress. The potential social and physical cost to individuals and
the potential cost to the economy of the current low uptake of annual leave makes it imperative
to see if a lower workplace accident rate can be obtained by those employees who do have a
reasonable holiday break each year. If this is the case then it may be that there is some value in
compulsory leave clauses being negotiated into employment instruments.”80
[122] There is little doubt that not taking annual leave gives rise to a risk of fatigue at work.
Safe Work Australia describes fatigue as “a state of mental and/or physical exhaustion which
reduces a person’s ability to perform work safely and effectively”. Fatigue can adversely
affect health and safety at the workplace—it reduces alertness which may lead to errors and
an increase in incidents and injuries.81 Safe Work Australia observed that the best way to
control the health and safety risks arising from fatigue is to eliminate the factors causing
fatigue at the source. One of the control measures for fatigue risks which Safe Work Australia
suggests can be built into a work schedule is:
“ ... implementing processes to manage accrued leave balances and requests for leave, for
example setting maximum limits of leave accrual to encourage workers to use it.”82
[123] The accumulation of leave is also a significant issue for employers.
[124] As mentioned earlier, ACCI and Ai Group filed a joint expert accounting report by Mr
Eugene Kalenjuk, a partner at PricewaterhouseCoopers. No objection was taken to this
evidence and no party sought to cross-examine Mr Kalenjuk.
[125] In the course of his statement Mr Kalenjuk expressed the following opinion about the
commercial implications that arise for employers where employees accrue substantial annual
leave balances (i.e. balances in excess of six weeks). Mr Kalenjuk provided a series of
examples (which we need not set out) to support the following opinions:
“In general terms, the financial impact of an employee accruing a substantial annual leave
balance is that there is a reduction in the reported profitability of the employers business (all
else being equal) where an employee’s annual leave accrual increases. The other side of the
entry is to increase the liability thereby decreasing the net assets of the business.”83
[126] The Employer Survey also highlighted some of the difficulties associated with accrued
leave. Questions 12 and 13 from the Employer Survey provided as follows:
31
“12. Does your organisation have a view about employees accruing more than 6 weeks of
annual leave?
No particular view
It is not really an issue in our organisation
We do not like employees accruing more than 6 weeks of leave
13. If you answered that your organisation does not like employees accruing more than
6 weeks’ annual leave, why does it not?
Please specify: _________________________”
[127] As to Question 12, some 2031 employers (over half of those who responded to this
question) stated that they “do not like employees accruing more than 6 weeks of leave”. Some
948 employers stated that employees accruing more than six weeks’ paid annual leave was
“not really an issue” in their organisation, and 781 employer responses had “no particular
view” on the issue.84
[128] Question 13 was set up to receive an open field response from the respondent. This
means that the respondent was invited to type in their answer to the question rather than
selecting between specified options. Question 13 was conditional on the respondent having
answered the previous question by indicating that their organisation did not like employees
accruing more than six weeks’ leave.
[129] There were a significant number of responses to Question 13. The raw data is
extracted in Attachment F to ACCI’s written submission of 20 June 2014. It represents the
responses of 2026 respondents and constitutes approximately 44 000 words. Table 3
summarises the prevalence of certain commonly raised terms contained in the raw data to the
question:
Table 3: Summary of terms used in response to survey Question 13
Search term Number of hits
Cost 353
Cashflow/cash flow 153
Liability 434
Balance sheet 83
Budget 41
Life balance 77
Health 153
Fatigue 18
Cover (i.e. cover employee while on leave) 143
Small business 176
[130] The Employer Survey also canvassed whether employers sought the right to direct
employees to take accrued leave. Question 14 provided as follows:
32
“14. Does your organisation wish to have the right to direct employees who have accrued more
than 6 weeks to take annual leave?
Yes
No
No view”
[131] In response to Question 14, 2859 employers (about 76 per cent of those who
responded to this question) said that their organisation wanted to have the right to direct
employees who have accrued more than six weeks’ paid annual leave to take annual leave.
Some 413 employers did not seek such a right and 487 answered “unsure”.
[132] Consistent with the survey responses to Question 13, Skinner and Pocock also noted
that the accumulation of leave is “a significant issue for employers as unused leave represents
a significant financial liability and tax disadvantage, for paid leave cannot be claimed as a tax
deduction until it is paid out”.85 Skinner and Pocock also explored the implications of their
research for policy and practice, and in that context made the following observation:
“Unused leave also represents a significant financial liability for enterprises; hence, there are
substantial benefits to employers for ensuring uptake of paid leave. Organisational policies
related to the management of paid leave, including monitoring paid leave uptake and ensuring
that a minimum number of paid leave days are taken over 12 to 24 months, would also appear
beneficial.”
86
[133] As well as the financial cost associated with leave accruals, ACCI submitted that
providing a mechanism to reduce excessive leave accruals “should ensure a more balanced,
rested and (accordingly) productive workforce”.87
[134] Historically, industrial tribunals have accepted that taking annual leave can give rise to
an increase in productivity. ACCI referred to two decisions in support of this proposition. In
Re Professional and Shopworkers No.2 Award,88 Heydon J dealt with an appeal concerning
the jurisdiction of a wages board (the Professional and Shopkeepers’ Group No. 2 Board) to
grant a claim for “three weeks holiday on full pay”. The claim was not opposed by the
employers but the Board held that it had no power to grant the claim. In upholding the appeal
Heydon J made the following observation about benefits of a provision of the type sought:
“... the result of investigations by expert students into the whole question of rest for
workers of all classes indicated that it is assuming enormous importance, and it has
been shown in occupations of the most varied character that a diminution of the time
worked by granting longer and more frequent intervals of rest has resulted in greater
and better production of work.”89
[135] The judgment of Dethridge CJ (of the Commonwealth Court of Conciliation and
Arbitration) in The Printing and Allied Trades Employers Federation of Australia & Anor v
The Printing Industry Employees Union of Australia & Ors90 was one of the earliest arbitrated
decisions to grant a period of annual leave. In awarding one week’s paid leave, his Honour
made the following observation:
“Unless an industry is finding difficulty in maintaining itself, in my opinion the institution of
paid annual leave is a very desirable boon for employers. Although at first it might cause some
increase in labour cost, this probably would not be commensurate with the shortening of the
33
working year and ultimately might be virtually balanced by increased vigour and zeal of
employees. The publication already referred to (International Labour Office (1935) ‘Holidays
with Pay at p 82) has the following passage ‘It would undoubtedly be a fallacy, even from a
purely economic point of view, to regard paid holidays as a burden to the employer for which
he receives no return. On the contrary, he obtains a very real return by finding his employees
fresh and eager for work when they return from their holidays. He reaps an advantage in higher
output, fewer spoilt goods, less absence, less sickness and fewer accidents.’” 91
[136] The evidence on whether paid leave improves productivity appears to be somewhat
mixed and inconclusive.92 However, there is evidence that absenteeism is reduced after a
period of paid annual leave. Westman and Etzion,93 found that absenteeism for non-health
reasons “remained lower than before vacation even six weeks after returning from vacation”.
Westman and Etzion also reported other benefits associated with taking vacations:
“... vacation relief decreases psychological and behavioural strains caused by job stress ...
The vacation alleviated perceived job stress and thus also the experience of burnout as
predicted, replicating findings that a respite from work has the effect of lessening strain ...
Measuring job stress and burnout three times enabled us to discover that vacation has an
abrupt, positive impact that fades gradually.”94
[137] A subsequent study included a control group of comparable employees who did not
experience a vacation and concluded that:
“Taking a vacation was found to affect stress and burnout. Upon return from vacation there was
a significant drop in stress compared with the initial pre-vacation level. However,
approximately three weeks after the return to work, the level of stress had reverted to its initial
pre-vacation level. Among the comparison group members, no change in levels of stress
occurred over time. The level of burnout also fell significantly after the vacation, and had still
retained its low level 3 weeks after returning to work ...
Employees who took long vacations reported lower levels of stress than those who took short
vacations ... and the length of the vacation tended to moderate the relationship between
satisfaction with the vacation and stress and burnout ...
It seems that the effects of taking a vacation are also positive when the employees are able to
determine its dates and duration voluntarily. Employees return from their vacation less
stressed and burned out, and — it may be reasonably assumed, although we have no direct
proof — their productivity increases, at least for the short term.”95
[138] The evidence canvassed above (at paragraphs [118]–[137]) supports the following
findings:
(i) Not taking a reasonable portion of leave can give rise to a serious threat to the
health and safety of the employees concerned.
(ii) Excessive annual leave accruals are a significant issue for employers. Such
accruals represent a significant financial liability and can give rise to cash flow
problems (particularly for small businesses) when paid out on termination.
(iii) The taking of accrued paid annual leave can have mutual benefits for
employees and employers:
34
(a) Taking paid annual leave provides employees with a period of rest and
recovery from work and has significant positive implications for employee
health and wellbeing. As well as providing an opportunity for rest and
recovery, taking paid annual leave also provides employees with the time and
opportunity to attend to their family and other commitments and to engage in
social, community and personal interests.
(b) While the evidence on whether taking paid leave improves productivity
appears to be somewhat mixed and inconclusive, there is evidence that
absenteeism is reduced after a period of leave and of a strong correlation
between workplace stress and anxiety and not taking leave breaks. A period of
paid leave is also likely to reduce fatigue at work and improve workplace
health and safety.
[139] Based on the material before us and the findings set out at paragraphs [116] and [138],
we are persuaded that modern awards should include a mechanism for dealing with
“excessive leave”. We now turn to the form and content of that mechanism.
[140] In considering an appropriate response to the issue of ‘excessive’ paid annual leave
accruals it is important to consider the reasons why employees do not fully utilise their
accrued paid leave. We propose to consider this issue first before turning to the Employer
Group claim.
Reasons for excessive annual leave accruals
[141] As shown in Table 4 below, Skinner and Pocock found that the most common reason
given by employees for not taking their full leave entitlement was ‘saving it for a future
holiday’. This reason was indicated by 41 per cent of all workers in both 2002 and 2010.
However, 30 per cent of employees said they were too busy at work to take all of their leave.
This was very close to the proportion who provided this response in the 2002 survey (29.1 per
cent). A larger proportion of women said that they were too busy to take leave in 2009 than in
2002, while there was no change for men. A total of 13 per cent of employees in 2010 said
that they could not get the time off that suited them, and a similar proportion (12.5 per cent)
provided such a response in 2002. That is, they could not reach agreement with their employer
to take leave at a time of their choosing.96
[142] These were also the dominant reasons, in the above order, among parents and those
without children. Younger workers were more likely to say that they were saving their leave
for a future holiday, while older workers were more likely to say that they were too busy to
take leave.97
Table 4: Reasons for not taking full leave entitlement—AWALI 2010 and TAI 2002
AWALI 2010 TAI 2002
Men
(%)
Women
(%)
All
(%)
Men
(%)
Women
(%)
All
(%)
Saving leave for future holiday 41.8 39.5 41.0 39.5 37.3 38.8
Could not get time off that suited you 13.1 13.5 13.2 11.3 15.1 12.5
35
Too busy at work 29.1 33.8 30.7 29.4 28.2 29.1
Rather have the money than extra holidays 8.1 5.4* 7.2 3.9 3.2 3.7
Preferred to work rather than take holidays 10.0 6.8 8.9 8.1 5.7 7.4
Leave paid out when changed jobs 6.4 4.0* 5.6 8.3 2.7 6.6
Other reason 17.2 15.6 16.6 2.2* 7.3 3.7
Note: *Estimate unreliable due to insufficient sample size.
Source: Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life balance,
Journal of Industrial Relations, 21 August 2013, Vol. 55 at p. 688.
[143] Table 5 shows workers’ reasons for not taking their full leave entitlement by various
employment characteristics. Those working long hours (45 or more) were much more likely
than those working 35–44 hours to say that they were too busy to take leave. They were also
less likely to say that they were saving their leave for a future holiday. Skinner and Pocock
suggested that “it appears that those working long hours struggle to take paid leave in the face
of work demands” and that “those working long hours are affected by a compounding work–
life disadvantage: their long hours are associated with much worse work–life interference
compared to other workers ... as is their lower rate of annual leave-taking”.98
Table 5: Reasons for not taking full leave entitlement by work hours, employment
contract and occupation—AWALI 2010
Work hours Contract Occupation
35–44
(%)
45+
(%)
Ongoing
(%)
Fixed-term
(%)
Prof.
(%)
Other
(%)
Saving leave for future holiday 45.6 35.6 42.3 28.0 39.0 42.1
Could not get time off that suited
you 13.4 13.1 12.8 17.1* 11.5 14.5
Too busy at work 22.5 40.3 29.8 39.0 36.9 25.4
Rather have the money than extra
holidays 81.0 5.9 6.8 ** 3.3* 10.4
Preferred to work rather than take
holidays 10.0 7.7 9.1 ** 6.4 11.3
Leave paid out when changed
jobs 6.6 4.2* 5.0 ** 4.3* 6.2
Other reason 18.3 14.6 16.2 20.7* 16.0 17.5
Source : (Skinner & Pocock 2013, p. 689)
Notes: *Estimate unreliable due to insufficient sample size; **Estimate not provided due to inadequate sample size. Multiple responses were
allowed on this item.
[144] The above data suggest that a significant barrier to the use of leave entitlements by
employees is work pressures, with 43.9 per cent of employees in the AWALI survey being
either too busy at work (30.7 per cent) or unable to take leave at a time that suited them
(13.2 per cent). This suggests that employers are not creating workplaces that allow for
employees to use their entitlements.
[145] Skinner and Pocock argued that these findings create a case for “renovating”
Australia’s annual leave system to ensure that more Australians have access to paid leave,
including:
36
“[T]o address the barriers that appear to affect taking leave in the year in which it is
accumulated. Work pressures are clearly a significant factor affecting almost a third of full-
timers. Although the Fair Work Act 2009 states that employers must not unreasonably refuse
to grant an employee’s request for paid leave, this has not prevented a widespread problem of
reluctant leave deferral. It seems that managerial and cultural barriers to the uptake of paid
leave, such as intense and demanding work, now affect many workers.”99
[146] We now turn to the Employer Group’s claim.
The Employer Group’s claim
[147] The Employer Group seek to insert a standard “excessive annual leave” model term in
70 modern awards (see paragraph [59]).
[148] We now deal with the content of such a model term and whether all modern awards
should be varied to insert the model term. It is convenient to deal with the second issue first.
[149] The Employer Group was not seeking to insert its model “excessive annual leave”
clause into all modern awards. Rather it was proposed that the Employer Group’s model
clause be inserted into 70 modern awards.100 The proposed variations are split into two
categories:
(i) the 39 modern awards which do not currently contain any provisions allowing
employers to direct employees to take excessive annual leave (see Attachment D);
and
(ii) the 31 modern awards which do currently contain provisions regarding excessive
leave but those provisions do not provide the same ability to direct the taking of
excessive leave as is proposed in the Employer Group’s claim (see Attachment E).
[150] The Employer Group does not seek to vary the 52 modern awards that already contain
provisions allowing employers to direct the taking of excessive leave in a manner similar to
(or in some circumstances more flexible than) the model clause proposed. To understand the
practical effect of the Employer Group’s claim we need to say something about those modern
awards which already contain excessive leave provisions.
[151] Some 79 modern awards already contain “excessive leave” provisions101 and these can
be summarised as follows:
52 awards (67 per cent) provide that the employer’s right to direct an employee to
take annual leave is only enlivened once the employee has accrued eight weeks’ or
more annual leave. A further 17 awards have the threshold at six weeks’ accrued
leave.102
25 awards (32 per cent) provide that an employee can only be directed to take a
period of annual leave after “the employer has genuinely tried to reach agreement
with an employee as to the timing of taking annual leave”.
22 awards (28 per cent) provide that annual leave must be taken within a specified
period after accrual. 103 Most of these awards (14) provide that annual leave must be
37
taken “within 18 months of the entitlement accruing”104 and four provide that leave
must be taken within six months of accrual.
75 awards (95 per cent) provide that an employer must give at least four weeks’
notice of the time when such leave is to be taken; two of these awards provide for
eight weeks’ notice.105
33 awards (42 per cent) limit the amount of accrued paid annual leave that an
employer can direct an employee to take: 28 of these awards limit the amount to
25 per cent of the employee’s accrued paid annual leave balance and four awards
provide that the employee must retain an entitlement to at least four weeks’ accrued
paid leave after taking the leave as directed.
[152] The practical effect of the Employer Group’s proposal, if granted, would be to provide
some greater consistency in relation to the mechanisms in modern awards for dealing with
excessive accruals of paid annual leave (70 awards would contain consistent provisions).
[153] However, in many of the 31 modern awards which presently contain excessive leave
provisions, and which the Employer Group sought to vary to insert its model term, such
consistency would have the consequence of reducing the existing safeguards in those awards.
Some 30 of the modern awards the Employer Group sought to vary presently limit an
employer’s right to direct an employee to take paid annual leave to circumstances where the
employee has at least eight weeks’ accrued paid annual leave. The Employer Group’s claim
sought to reduce this threshold to six weeks’ accrued leave.
[154] Further, if the Employer Group’s claim was granted, some 52 of the 122 modern
awards would not contain the model term. In many of these modern awards there is an
existing term which allows an employer to direct an employee to take all of their accrued
annual leave, such that the employee does not have the right to retain a minimum amount of
accrued paid leave. Under the Employer Group’s claim the employee would retain at least
four weeks’ accrued annual leave after the direction is given by the employer.
[155] We are not bound by either the terms of the relief sought by a party nor by the scope
(i.e. the awards to be varied) of the variations proposed. Context is important in this regard.
[156] These issues arise in the 4 yearly review of all modern awards. The Review is
essentially a regulatory function and the Commission must ensure that modern awards,
together with the NES, provide a fair and relevant minimum safety net of terms and
conditions. The role of modern awards and the nature of the Review are quite different from
the arbitral functions performed by the Commission in the past. In the Review context, the
Commission is not creating an arbitral award in settlement of an inter partes industrial
dispute—it is reviewing a regulatory instrument.
[157] In considering whether a particular term should prima facie be consistently inserted
into all modern awards it is important to consider the subject matter of the term itself.
[158] Modern awards and the NES interact in different ways:
A modern award may include any terms that the award is expressly permitted to
include by a provision of Part 2-2 (which deals with the NES) (s.55(2)).106
38
A modern award may include terms that:
(i) are ancillary or incidental to the operation of an entitlement of an employee
under the NES; or
(ii) terms that supplement the NES (s.55(4)).
[159] The statutory notes to s.55(4) provide examples. Note 1 states:
“Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by
section 90, an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.”
[160] Note 2 states:
“Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled
beyond the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or
paid/personal carer’s leave at a rate of pay that is higher than the employee’s base
rate of pay (which is the rate required by sections 90 and 99).”
[161] Note 3 states:
“Terms that would not be permitted by paragraph (a) or (b) include (for example) terms
requiring an employee to give more notice of the taking of unpaid parental leave than is
required by section 74.”
[162] Section 139(1)(h) is also relevant, it provides:
“A modern award may include terms about any of the following matters:
. . .(h) leave, leave loadings and arrangements for taking leave.”
[163] Annual leave is one of the minimum standards specified in the NES. The NES is
intended to provide a consistent set of minimum standards that apply to the employment of
national system employees. The NES annual leave provisions provide both a consistent set of
substantive rights (e.g. quantum of leave; method of accrual; and payment for leave) as well
as a degree of conditional flexibility.
[164] Section 93(3) is an example of what we mean by conditional flexibility (see paragraph
[89]). It provides, relevantly, that a modern award may include terms “requiring an employee
... to take paid annual leave in particular circumstances”. However, such flexibility is
conditional; an employee can only be required to take leave “if the requirement is
reasonable”.
39
[165] A model term dealing with the taking of paid annual leave to address the excessive
accrual of such leave is plainly a term of the type contemplated by ss.93(3) and (4). That is,
the model term is a term that is expressly permitted to be included in a modern award. It
seems to us that it will generally be desirable for greater consistency in respect of terms of this
character. This is particularly so in circumstances where the regulatory boundary between the
NES and modern awards is clearly delineated and the legislature has plainly contemplated (by
permitting such terms) that the terms of a modern award may provide some conditional
flexibility to the provisions of the NES.
[166] This may be contrasted with terms which supplement the NES, for example by
providing an additional period of paid leave. Ordinarily one would expect such
supplementation to reflect the circumstances applicable to particular modern awards, with the
desirability of consistency across modern awards a less important consideration.
[167] In its 20 June 2014 submission, Ai Group highlighted the benefits of greater
consistency in modern award provisions pertaining to annual leave:
“There is substantial merit in the Commission seeking to achieve a greater level of consistency
in award provisions pertaining to annual leave. There is also merit in seeking to achieve a level
of consistency in the rules governing the operation of annual leave entitlements for award
covered and award/agreement free employees.
We do not suggest that it is necessarily appropriate for all awards to have exactly the same
provisions (the Commission has always provided for deviations from model award clauses if
industry-specific circumstances warrant this) but there is nonetheless scope for much greater
consistency. The Employer proposals represent an important and timely step in the right
direction ...
Achieving a level of consistency in award entitlements relating to annual leave is consistent
with the obligation under the modern awards objective for the FWC to ensure modern awards,
together with the NES, provide a fair and relevant safety net taking into account “… the need
to ensure a simple, easy to understand, stable and sustainable modern award system for
Australia …”. Achieving greater uniformity between individual awards will make the system
simpler and easier to understand.
A reduction in variances between award entitlements will, in itself, reduce the regulatory
burden on businesses that are required to apply multiple awards, consistent with paragraph
134(1)(g) of the modern awards objective. These benefits will be magnified where such
amendments provide employers with greater flexibility or control in relation to the
management of annual leave or where incompatible provisions relating to matters such as
close-downs are addressed. There are obvious benefits that flow from enabling employers to
adopt a uniform approach to the management of annual leave across their workforce,
regardless of the award coverage of particular groups of workers.”107
[168] We agree with these observations. It seems to us that the effectiveness of any safety
net is substantially dependent upon those who are covered by it being able to know and
understand their rights and obligations. Greater consistency in the provisions governing the
taking of annual leave will make the safety net simpler and easier to understand.
[169] It follows from the foregoing that our provisional view is that a model term dealing
with the taking of annual leave should be consistently inserted in all modern awards. We
accept, of course, that some modern awards have particular leave provisions necessitating a
40
degree of “tailoring” to the model term. But, that said, our provisional view is that the model
term should be inserted in all modern awards.
[170] As to the issue of content, the Employer Group sought a term which provides that in
certain circumstances an employer may direct an employee to take paid annual leave. Such a
direction may only be made if:
(i) the employee has accrued at least six weeks of annual leave;
(ii) the employer gives the employee four weeks’ notice to take the annual leave;
and
(iii) the employee retains at least four weeks’ accrued leave after the direction is
given by the employer.
[171] Two general observations may be made about the model term sought.
[172] The first observation relates to the “safeguards” (at (i), (ii) and (iii) above) which
condition an employer’s power to direct an employee to take a period of paid annual leave.
The Employer Group’s claim essentially characterised the accrual of six weeks’ paid annual
leave as “excessive” thereby enlivening the power to direct the employee to take annual leave
(subject to (ii) and (iii)). We are not persuaded that the adoption of a threshold of six weeks’
accrued annual leave is appropriate, for three reasons.
[173] First, the adoption of a six week threshold ignores the fact that different annual leave
entitlements accrue to different categories of employees. Specifically, shiftworkers (as
referred to in s.87(1)(b) of the Act) are entitled to five weeks’ paid annual leave for each year
of service, whereas employees other than shiftworkers are entitled to four weeks. Any
definition of excessive accrued leave should take account of this difference.
[174] Second, over two-thirds (52) of the 79 modern awards which presently contain
excessive leave provisions provide that an employer’s right to direct an employee to take
annual leave is only enlivened once the employee has accrued an entitlement to eight weeks’
or more paid annual leave.
[175] Third, the adoption of a six week threshold unfairly limits the capacity for employees
to accrue leave for a later, longer, holiday. It will be recalled that Skinner and Pocock found
that the most common reason given by employees for not taking leave was saving it for a
future holiday.
[176] Later in this decision we return to the proposed safeguards dealing with notice (at (ii))
and the quantum of retained leave after a direction has been given and implemented (at (iii)).
[177] We also observe that the Employer Group’s model term does not require an employer
to enter into any dialogue with an employee before directing them to take part of their annual
leave. In particular, the employer is under no obligation to discuss the issue of excessive
annual leave accrual with the employee or to seek to reach an agreement with the employee
about the time for taking such leave. It is plainly preferable if these matters can be resolved by
agreement between the employer and employee, without the need for a direction. We note that
about one-third (25) of the 79 modern awards which presently contain excessive leave
41
provisions provide that an employee can only be directed to take a period of annual leave
after the “employer has genuinely tried to reach agreement with an employee as to the timing
of taking annual leave”.
[178] We now turn to the second general observation about the Employer Group’s model
term. This observation concerns the limited capacity of the model term to address the problem
to which it is directed.
[179] It will be recalled that s.88 of the Act deals with the taking of paid annual leave, as
follows:
“Taking paid annual leave
(1) Paid annual leave may be taken for a period agreed between an employee and his or
her employer.
(2) The employer must not unreasonably refuse to agree to a request by the employee to
take paid annual leave.”
[180] The Skinner and Pocock research suggests that the excessive accrual of paid annual
leave is predominantly a consequence of:
(i) employee choice (i.e. employees choosing to accrue leave, usually to save it for
a future holiday);
(ii) employees being too busy at work to take all of their leave; or
(iii) employees not being able to take their leave at a time that suited them (i.e. they
could not reach agreement with their employer to take leave at a time of their
choosing).
[181] The Employer Group’s model term only partially addresses the reasons for the accrual
of excessive leave. It will provide a mechanism for dealing with the voluntary leave hoarder
((i) above) and may address circumstance (iii), by requiring employees to take leave at a time
that may not suit them, but it does not address circumstance (ii).
[182] Circumstance (ii) is, essentially, where work pressure prevents an employee from
taking all of their paid annual leave. It is the reason nominated by 30 per cent of employees in
the Skinner and Pocock survey for not taking all of their leave. It is a significant factor in the
excessive accrual of annual leave and it was not addressed in the Employer Group’s model
term.
[183] The Employer Group’s claim, understandably enough, provided a mechanism to
address employer concerns about the accumulation of leave—that is, it provides a means of
reducing a significant financial liability.
[184] But the Employer Group’s model term provided no avenue for an employee to
exercise any control over the time at which their leave is to be taken.
[185] In this context it is important to observe that the Employer Group’s claim simply
sought to replicate (in form if not substance) previous legislative and award mechanisms to
42
address excessive annual leave accruals. As we have mentioned, before the Work Choices Act
amendments, some state and territory annual leave laws provided employers with a right to
direct employees to take their annual leave. Further, some 79 modern awards also contain
“excessive leave” provisions.
[186] But, importantly, experience has shown that providing employers with a right to direct
employees to take their annual leave has not provided a complete solution to the issue of
excessive annual leave accruals.
[187] Skinner and Pocock found that in 2009 only 40.3 per cent of full-time employees used
all of their paid annual leave. Hence, about 60 per cent of full-time employees accrued a
portion of their leave. Similar results were obtained in a 2002 survey (only 38.8 per cent of
employees used all of their paid leave). As a result, most employees accrued annual leave
despite the fact that employers had the right to direct them to take that leave.
[188] Ai Group described the Employer Group’s claim as “a modest step towards restoring
employers” capacity to manage leave accruals’.108 But the Employer Group’s claim sought to
“restore” a right of direction which has only had, at best, limited success in the past in
addressing the issues associated with excessive annual leave accruals.
[189] We are not persuaded that the variation of modern awards to insert the Employer
Group’s proposed model term is appropriate, nor will it be sufficient to address the problems
of excessive accrued paid annual leave. We have redrafted the Employer Group’s proposed
model term to provide a model term dealing with the taking of annual leave. The model term
incorporates the employer’s right to direct—which is the central feature of the Employer
Group’s claim—but also makes provision for the circumstance where an employee accrues
excessive paid annual leave but no employer direction is made.
The model term—Excessive Annual Leave Accruals
1. Excessive Annual Leave Accruals
This clause contains provisions additional to the NES about taking paid annual leave,
to deal with excessive paid annual leave accruals.
1.1 Definitions
Shiftworker means [insert definition]
An employee has an excessive leave accrual if:
(a) the employee is not a shiftworker and has accrued more than eight weeks’
paid annual leave; or
(b) the employee is a shiftworker and has accrued more than 10 weeks’ paid
annual leave.
1.2 Eliminating excessive leave accruals
(a) Dealing with excessive leave accruals by agreement
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Before an employer can direct that leave be taken under subclause
1.2(b) or an employee can give notice of leave to be granted under
subclause 1.2(c), the employer or employee must request a meeting and
must genuinely try to agree upon steps that will be taken to reduce or
eliminate the employee’s excessive leave accrual.
(b) Employer may direct that leave be taken
This subclause applies if an employee has an excessive leave accrual.
If agreement is not reached under subclause 1.2(a), the employer may
give a written direction to the employee to take a period or periods of
paid annual leave. The direction must state that it is a direction given
under subclause 1.2(b) of this award.
Such a direction must not:
(i) result in the employee’s remaining accrued entitlement to
paid annual leave at any time being less than six weeks
(taking into account all other paid annual leave that has
been agreed, that the employee has been directed to take or
that the employee has given notice of under subclause
1.2(c));
(ii) require the employee to take any period of leave of less
than one week;
(iii) require the employee to take any period of leave
commencing less than eight weeks after the day the
direction is given to the employee;
(iv) require the employee to take any period of leave
commencing more than 12 months after the day the
direction is given to the employee; or
(v) be inconsistent with any leave arrangement agreed between
the employer and employee.
An employee to whom a direction has been given under this subclause
may make a request to take paid annual leave as if the direction had not
been given. The employer is not to take the direction into account in
deciding whether to agree to such a request.
Note: The NES state that the employer must not unreasonably refuse to
agree to a request by the employee to take paid annual leave.
If leave is agreed after a direction is issued and the direction would then
result in the employee’s remaining accrued entitlement to paid annual
leave at any time being less than six weeks, the direction will be
deemed to have been withdrawn.
The employee must take paid annual leave in accordance with a
direction complying with this subclause.
44
(c) Employee may require that leave be granted
This subclause applies if an employee has had an excessive leave
accrual for more than six months and the employer has not given a
direction under subclause 1.2(b) that will eliminate the employee’s
excessive leave accrual.
If agreement is not reached under subclause 1.2(a), the employee may
give a written notice to the employer that the employee wishes to take a
period or periods of paid annual leave. The notice must state that it is a
notice given under subclause 1.2(c) of this award.
Such a notice must not:
(i) result in the employee’s remaining accrued entitlement to
paid annual leave at any time being less than six weeks
(taking into account all other paid annual leave that has
been agreed, that the employee has been directed to take or
that the employee has given notice of under this
subclause);
(ii) provide for the employee to take any period of leave of less
than one week;
(iii) provide for the employee to take any period of leave
commencing less than eight weeks after the day the notice
is given to the employer;
(iv) provide for the employee to take any period of leave
commencing more than 12 months after the day the notice
is given to the employer; or
(v) be inconsistent with any leave arrangement agreed between
the employer and employee.
The employer must grant the employee paid annual leave in accordance
with a notice complying with this subclause.
(d) Dispute resolution
Without limiting the dispute resolution clause of this award, an
employer or an employee may refer the following matters to the Fair
Work Commission under the dispute resolution clause:
(i) a dispute about whether the employer or employee has
requested a meeting and genuinely tried to reach agreement
under subclause 1.2(a);
(ii) a dispute about whether the employer has unreasonably
refused to agree to a request by the employee to take paid
annual leave; and
(iii) a dispute about whether a direction to take leave complies
with subclause 1.2(b) or whether a notice requiring leave to
be granted complies with subclause 1.2(c).
45
[190] The model term is intended to establish mechanisms to assist both employers and
employees to reduce or eliminate “excessive leave accruals” consistent with the statutory
framework and subject to appropriate safeguards. It incorporates both terms requiring an
employee to take leave in particular circumstances (s.93(3)) and terms otherwise dealing with
the taking of paid annual leave (s.93(4)).
[191] Subclause 1.1 defines “excessive leave accrual” as more than eight weeks’ paid annual
leave, or 10 weeks’ paid annual leave in the case of a “shiftworker” (as defined in the modern
award for the purposes of the additional week of annual leave provided for in the NES). This
threshold of eight weeks is consistent with s.236(6) of the former WR Act and with the
majority of current modern award clauses which contain excessive leave provisions (see
further the discussion at paragraphs [172]–[175] above). As with paid annual leave
entitlements under the NES generally, the eight or 10 week threshold is based upon an
employee’s ordinary weekly hours of work (see s.87(2) of the Act).
[192] Where an employee has an excessive leave accrual, the model term requires the
employer or employee firstly to request a meeting to try to resolve the matter by agreement. If
agreement cannot be reached, the model term provides for the employer to issue a direction
that certain leave be taken and/or for the employee to give the employer a written notice
requiring that certain leave be granted.
[193] Subclause 1.2(a) provides that, before an employer can issue such a direction or an
employee can give such a notice, the employer or employee must:
request a meeting; and
genuinely try to agree upon steps that will be taken to reduce or eliminate the
employee’s excessive leave accrual.
[194] An excessive leave accrual would be eliminated if, immediately after all of the agreed
steps had been taken, the employee’s accrued leave entitlement would be less than eight
weeks for a non-shiftworker or 10 weeks for a shiftworker. This might be achieved in a
number of stages, through the employee taking a number of agreed periods of annual leave.
The employee might also choose to cash out some annual leave in accordance with the
award’s cashing out provisions.
Example
Brendan is a part-time employee not working shifts whose ordinary hours of work are 19 per
week. Brendan usually takes four weeks’ annual leave at Christmas (76 hours), but for the past
three years has taken only one week and at the start of the year has an accrued entitlement to
nine weeks’ paid annual leave.
Brendan and his supervisor meet to discuss Brendan’s excessive leave accrual. Brendan
explains that he is hoping to take six weeks’ annual leave to travel overseas in the middle of
the year and then to resume taking four weeks’ leave at Christmas. This leave can be readily
accommodated by the employer, but Brendan’s supervisor requests that Brendan take an
additional week’s leave on top of the six weeks and again at Christmas so as to reduce his
leave accrual at the start of the following year to one week. Brendan and his supervisor agree
to these arrangements and no direction to take leave is issued by the employer.
46
[195] Subclause 1.2(a) requires the employer or employee to genuinely try to reach an
agreement. The notion of genuinely trying to reach agreement appears in a number of contexts
in the Act, including: determining whether there is pattern bargaining (ss.412(2)–(5));
industrial action being protected (s.413(3)); suspension or termination of protected industrial
action (s.423(4)(f)); and an application for a protected action ballot order (s.443(1)(b)).
[196] Where an employer and employee are unable to agree on steps to eliminate the
employee’s excessive leave accrual, subclause 1.2(b) provides for the employer to give the
employee a written direction to take a specified period or specified periods of paid annual
leave. The employee must take paid annual leave in accordance with an employer direction
that complies with the requirements of this subclause.
[197] As a procedural safeguard, the direction must be in writing, and must state that it is
given under subclause 1.2(b) of the modern award. This will assist in ensuring that the
employee is aware of his or her obligation to comply with the direction and of the limitations
on such a direction. These limitations are intended to ensure that a requirement to take leave
under the model term is “reasonable” in terms of s.93(3) of the Act. The Full Bench in
Australian Federation of Air Pilots v HNZ Australia Pty Ltd recently observed that in
assessing the reasonableness of such a requirement, “all relevant considerations needed to be
taken into account including those which are set out in paragraph [382] of the Explanatory
Memorandum to the Fair Work Bill 2008”109 (see paragraph [89] above).
[198] Paragraphs (i) to (iv) of subclause 1.2(b) set out limitations on the period or periods of
leave that may be required under the direction.
[199] Paragraph 1.2(b)(i) limits the amount of leave that the employee may be directed to
take, by requiring that the direction must not result in the employee’s remaining accrued leave
entitlement at any time being less than six weeks.
[200] Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act
and with the majority of current modern award clauses which limit the amount of accrued
paid annual leave that an employer can direct an employee to take. It also accommodates the
circumstance of an employee seeking to accrue leave so that he or she can take a reasonable
extended holiday. The minimum is applied by considering the effect on the employee’s leave
accrual of the directed leave being taken, taking into account all previously agreed paid
annual leave, any previous directions to take leave and any previous notices given by the
employee under subclause 1.2(c).
[201] Paragraph 1.2(b)(ii) requires the minimum length of any period of directed leave to be
one week. This is to avoid an employee being required to take leave in a series of single days
or clusters of a small number of days.
[202] Paragraph 1.2(b)(iii) requires that the employee be given at least eight weeks’ notice
of the commencement of the directed leave. This is intended to ensure that the employee has a
reasonable amount of time to make arrangements for activities during the leave period and/or
to coordinate his or her leave with family members. The same notice period applies in
circumstances where an employee gives written notice to the employer, pursuant to subclause
1.2(c).
47
[203] Paragraph 1.2(b)(iv) requires that the directed leave commence in not more than
12 months. This is intended to ensure that the excessive leave accrual is dealt with reasonably
promptly, but still allow sufficient scope for the leave to occur at a time that is suitable to both
the employer and the employee.
[204] Paragraph 1.2(b)(v) requires that the direction not be inconsistent with any leave
arrangement agreed to by the employer and employee. For example, general arrangements for
taking leave might have been agreed in the employee’s contract of employment, or there may
have been a one-off agreement between the employer and employee that the employee could
accrue excessive leave for a particular purpose.
[205] A further limitation intended to ensure that a requirement to take leave under the
model clause is reasonable is that a direction under subclause 1.2(b) operates subject to
s.88(2) of the Act. Subclause 1.2(b) provides that an employee given a direction to take leave
may make a request to take paid annual leave as if the direction had not been given. Under the
NES (s.88(2)) the employer must not unreasonably refuse such a request. Further, the giving
of the direction will not be a relevant factor in determining whether refusal of such a
subsequent leave request is unreasonable. If leave is agreed after a direction is issued and the
direction in combination with the agreed leave would then result in the employee’s leave
accrual at any time being reduced below six weeks, the direction will be deemed to have been
withdrawn.
[206] In effect, this limitation means that the employee retains his or her entitlement under
s.88 of the Act to take accrued paid annual leave, notwithstanding a direction to take leave
under subclause 1.2(b). For example, the employee might request to take some or all of the
directed leave at a time or times that better suit the needs of the employee and if such a
request is made it cannot be unreasonably refused by the employer.
[207] This limitation has been provided to make clear how this arrangement enables the
particular circumstances of the employee and employer at the time (including matters
personal to the employee) to be taken into account. (See Australian Federation of Air Pilots v
HNZ Australia Pty Ltd.)110
[208] The note regarding the NES in subclause 1.2(b) is an incidental term within the
meaning of s.142 of the Act and/or an ancillary or incidental term within the meaning of
s.55(4), and will assist in ensuring that the operation of the modern award clause is easy to
understand in terms of s.134(1)(g).
Example
Sam is a full-time shiftworker who has not taken any annual leave in the three years she has
worked for her employer and so has an accrued entitlement to 15 weeks’ leave after three
years. Sam’s employer encourages its employees to take their full five weeks of annual leave
each year in two periods—one during the middle of the year and one towards the end of the
year.
Sam’s supervisor meets with her to propose that she take seven weeks’ leave at midyear and a
further seven weeks towards the end of the year, so as to reduce her leave accrual to six weeks
by the end of the fourth year. However, the only leave that Sam will agree to is one period of
five weeks before the middle of the year and no agreement is reached. Sam’s supervisor issues
a direction that she is to take the two leave periods the supervisor had proposed.
48
After the direction is issued, Sam applies to take five weeks’ leave before the middle of the
year. While this is not the most convenient time for the employer, it can accommodate this
leave period without significant additional cost or disruption to its business. As the employer
is aware that it must not unreasonably refuse the requested leave, and that the issuing of the
direction is not a relevant factor to take into account, the employer approves the leave.
As the direction would require Sam to take a further 14 weeks’ leave and this would reduce
her accrued entitlement at the end of the year to one week, the direction is deemed to be
withdrawn. However, as Sam will not agree to take any further leave even though she has been
granted the leave she requested, the employer issues a new direction requiring her to take a
further five week leave period during the middle of the year and a further four week period
towards the end of the year. This will leave Sam with at least six weeks’ accrued leave at the
end of the fourth year, after she has taken the agreed leave and the two directed periods of
leave.
[209] Subclause 1.2(c) provides for an employee to give a written notice to the employer
that the employee wishes to take paid annual leave. This is intended to address circumstances
such as where an employee’s requests to take his or her full leave accrual have repeatedly
been refused by the employer, or the employee has repeatedly been dissuaded from applying
to take his or her full leave accrual. The proposed subclause provides that the employer must
grant the employee paid annual leave in accordance with a notice complying with this
subclause. While subclause 1.2(c) may be characterised as supplementing the NES (within the
meaning of s.55(4)), we acknowledge that there may be some tension between the proposed
subclause and s.88. These issues can be canvassed in the opportunity provided to make further
submissions (see paragraph [219]).
[210] Such a notice can only be given by the employee if the employee has had an excessive
leave accrual for at least six months. This provides the employer with a reasonable
opportunity to deal with the employee’s excessive leave accrual before the employee is able
to require that leave to be granted. If the employer has already given the employee a direction
complying with subclause 1.2(b) to take leave and the directed leave will eliminate the
employee’s excessive leave accrual, then the employee cannot issue any notice. If a direction
has been given but after the directed leave is taken the employee will still have an excessive
leave accrual, the employee could issue a notice under this subclause.
[211] Similarly to an employer direction to take leave, the model term requires the employee
first to request a meeting and to genuinely try to resolve the employee’s excessive leave
accrual by agreement.
[212] The procedural safeguards and limitations on the period or periods of leave that can be
specified in a notice under subclause 1.2(c) mirror those that apply to an employer direction to
take leave under paragraphs (i) to (v) of subclause 1.2(b), as outlined above.
Example
Ramesh is a full-time employee not working shifts in a busy, small workplace. Ramesh has
sought to take his full leave entitlement to spend time with his family each year for the
previous four years, but his employer has granted him only one week’s leave each year, on the
basis that the business is too busy to cover a longer absence.
49
Ramesh has an accrued entitlement to 12 weeks’ leave and wishes to take at least four weeks’
leave in six months time. Ramesh meets with his employer and requests the leave, but the
employer will only agree to him taking one week’s leave at the usual time.
As Ramesh has had an excessive leave accrual for over six months and has not been given a
direction by the employer that would eliminate his excessive leave accrual, Ramesh may issue
a notice to his employer requiring the employer to grant the four week leave period he wishes
to take.
[213] Subclause 1.2(d) of the model term draws attention to the capacity of the employer or
the employee to refer a dispute about a matter arising under the model term to the
Commission. As subclause 1.2(a) requires discussion between the employer and employee, it
is not necessary for there to be further discussions under the terms of the dispute resolution
clause before the dispute can be referred to the Commission.
[214] Our provisional view is that the variation of modern awards to incorporate the model
term is necessary to ensure that each modern award provides a fair and relevant minimum
safety net, taking into account the s.134 considerations (insofar as they are relevant) and
would also be consistent with the objects of the Act. This is so because of the various
safeguards provided within the term itself and because it facilitates the making of mutually
beneficial arrangements between an employer and employee.
[215] When leave is taken so as to reduce or eliminate excessive leave accruals, employees
will benefit from a period of rest and recovery from work, which has significant positive
implications for employee health and wellbeing. Reducing fatigue at work and improving
workplace health and safety is also of benefit to employers, and the evidence indicates that
absenteeism is also reduced after a period of leave. In addition, there is employer evidence
that excessive leave accruals represent a significant financial liability and can give rise to cash
flow problems (particularly for small businesses) when paid out on termination. Employers
therefore benefit from a mechanism to reduce their contingent liabilities.
[216] Section 134(1)(d) of the modern awards objective requires the Commission to take
into account the need to promote flexible modern work practices and the efficient and
productive performance of work, and under s.134(1)(f) the Commission must also take into
account the likely impact of any exercise of modern award powers on business, including on
productivity, employment costs and the regulatory burden.
[217] The issue of excessive leave accruals and untaken annual leave is of significance to
both employers and employees. For the reasons outlined above, the insertion of the model
term would assist in ensuring that modern awards are relevant to the needs of the modern
workplace, and would assist businesses.
[218] Finally, the insertion of the model term into modern awards is also consistent with the
objects of the Act by: providing workplace relations laws that are fair to working Australians
and are flexible for businesses (s.3(a)); ensuring a guaranteed safety net of fair, relevant and
enforceable minimum terms and conditions through the NES and modern awards (s.3(b));
assisting employees to balance their work and family responsibilities by providing for flexible
working arrangements (s.3(d)); and acknowledging the special circumstances of small and
medium-sized businesses (s.3(g)). In respect of s.3(g), as relatively few employees employed
in small businesses are covered by a collective agreement, a modern award variation of the
50
type proposed would ensure that all such businesses have capacity to deal with excessive
leave accruals.
[219] The model term outlined only reflects our provisional view as to the type of provision
which may be suitable for insertion into modern awards. We propose to provide interested
parties with an opportunity to make further submissions—directed at both the model term and
the proposition that all modern awards be varied to insert the model term. Submissions should
also address the modern awards objective. The process for filing further submissions is dealt
with in Chapter 6 of this decision. We will only reach a concluded view in respect of these
issues after considering all of the further submissions filed.
4.2 Cashing out of annual leave
[220] The claim advanced by the Employer Group sought to insert the following clause into
120 modern awards:
“Cashing out of annual leave
With the agreement of the employer, an employee may cash out an amount of accrued paid
annual leave provided that:
(a) the employee retains at least four (4) weeks of accrued annual leave
immediately after the agreed amount is cashed out;
(b) each cashing out of a particular amount of accrued paid annual leave must be
agreed by a separate agreement in writing; and
(c) the employee must be paid the full amount that would have been payable had
the employee taken the leave at the time that it is cashed out.”111
[221] We propose to deal with the relevant historical and legislative context before turning
to the merits of the claim advanced.
[222] Under previous legislative regimes, predecessor bodies to the Commission
consistently rejected proposals for the cashing out of annual leave on the basis that such
provisions undermined the purpose of annual leave, namely, “to provide a reasonable period
of physical and mental respite from work”.112 Enterprise agreement provisions providing for
the cashing out of annual leave were regarded as being contrary to the public interest as they
constituted a reduction in a “well established and accepted community standard”.113
[223] The Work Choices Act amended the WR Act to provide that employees could cash out
their annual leave in certain circumstances. The Work Choices Act inserted s.233 into the WR
Act, which provided that an employee could “cash out” an accrued annual leave entitlement
by written election and, with the agreement of their employer, provided that the workplace
agreement binding upon the employee and his or her employer made provision for the cashing
out of annual leave. The quantum of accrued annual leave that could be cashed out in any
12 month period was limited by s.233(2), which was in the following terms:
“(2) However, during each 12 month period, an employee is not entitled to forgo an
amount of accrued leave credited to the employee by an employer that is equal to more than
1/26 of the nominal hours worked by the employee for the employer during the period.”
51
[224] The practical effect of s.233(2) of the WR Act was that most full-time employees
could only cash out two weeks’ accrued annual leave in each 12 month period. Section 233(3)
provided additional safeguards, as follows:
“(3) An employer must not:
(a) require an employee to forgo an entitlement to take an amount of annual
leave; or
(b) exert undue influence or undue pressure on an employee in relation to the
making of a decision by the employee whether or not to forgo an entitlement to take
an amount of annual leave.”
[225] We have earlier described the award modernisation process which marked the
transition from the WR Act to the Act (see paragraph [94]).
[226] During the award modernisation process a number of employer organisations sought
to have provisions for cashing out annual leave included in modern awards. In its 2008 Award
Modernisation decision, the Award Modernisation Full Bench rejected these submissions on
the following basis:
“[99] A number of employer interests sought provisions for cashing out of annual leave by
agreement. Such arrangements are apparently included in many Australian Workplace
Agreements (AWAs) and workplace agreements. Should cashing out of annual leave become
widespread it would undermine the purpose of annual leave and give rise to questions about
the amount of annual leave to be prescribed. We think some caution is appropriate when
dealing with this issue at the safety net level. We do not intend to adopt a model provision.
Consistent with our approach to annual leave provisions generally we shall be influenced
mainly by prevailing industry standards, and the views of the parties, in addressing this issue.
[100] It has also been suggested that if awards do not provide for cashing out of annual leave it
will not be legally permissible to make workplace agreements which provide for cashing out.
In our opinion cashing out arrangements are an appropriate matter for bargaining. If, when the
legislative regime is settled, it is apparent that workplace agreements cannot provide for
cashing out of annual leave unless there is a relevant provision in a modern award it may be
necessary to revisit the question.”114
[227] It is important that the above observation be placed in the context of the sequence of
the various iterations of the award modernisation request. The original request was made by
the Minister on 28 March 2008. On 16 June 2008 the request was varied to include the
following paragraph:
“33. The NES provides that particular types of provisions are able to be included in modern
awards even though they might otherwise be inconsistent with the NES. The Commission may
include provisions dealing with these issues in a modern award. The NES allows, but does not
require, modern awards to deal with, among other things:
provision for loadings to be paid to school-based trainees and school-based apprentices in
lieu of certain entitlements;
averaging of hours of work;
cashing out of paid annual leave – provided that modern awards contain a prohibition on
undue influence or undue pressure and require payment of cashed out leave at full value;
52
the taking of paid annual leave;
particular circumstances in which an employee may be required to take paid annual leave;
cashing out of paid personal/carer's leave – provided that modern awards contain a
prohibition on undue influence or undue pressure and require payment of cashed out leave
at full value;
the kind of evidence required to be provided by an employee when taking paid
personal/carer's leave, unpaid carer's leave or compassionate leave;
substitution of public holidays; and
the amount of notice an employee may be required to provide when terminating their
employment.”
[228] On 18 December 2008, a further variation was made which replaced the above with
the following:
“33. The NES provides that particular types of provisions are able to be included in modern
awards even though they might otherwise be inconsistent with the NES. The Commission may
include provisions dealing with these issues in a modern award. The NES allows, but does not
require, modern awards to include terms that:
provide for loadings to be paid to school-based trainees and school-based apprentices in
lieu of certain entitlements;
enable the averaging of hours of work over a specified period;
provide for the cashing out of paid annual leave by an employee, provided that such terms
require:
- the retention of a minimum balance of 4 weeks’ leave after the leave is cashed out;
- the cashing out of each amount be by separate agreement in writing; and
- payment of cashed out leave be at at least the full amount that would have been
payable to the employee had the employee taken the leave that the employee has
forgone;
require employees, or allow employees to be required, to take paid annual leave, but only if
the requirement is reasonable;
otherwise deal with the taking of paid annual leave;
provide for the cashing out of paid personal/carer’s leave, provided that such terms require:
- the retention of a minimum balance of 15 days’ leave after the leave is cashed out;
- the cashing out of each particular amount be by separate agreement in writing; and
- the payment of cashed out leave be at least at the full amount that would have been
payable to the employee had the employee taken the leave that the employee has
forgone;
relate to the kind of evidence required to be provided by an employee when taking paid
personal/carer’s leave, unpaid carer’s leave or compassionate leave;
53
provide for the substitution of public holidays by agreement between an employer and
employee; and
specify the period of notice an employee may be required to give when terminating their
employment.”
[229] It is apparent from a subsequent statement on 23 January 2009 and a decision on
3 April 2009, that the 18 December 2008 variation to the award modernisation request was
not taken into account in the Full Bench’s 2008 Award Modernisation decision of
19 December 2008. In a statement issued on 23 January 2009115 the Award Modernisation
Full Bench said:
“[3] The Commission made 17 modern awards in the priority stage of award modernisation on
19 December 2008. Some matters were not finally dealt with in those awards and some matters
have arisen since which require further consideration in conjunction with Stage 2 of the
process.
Coverage, award flexibility and annual leave
[4] The award modernisation process was initiated by a request signed by the Minister for
Employment and Workplace Relations (the Minister) on 28 March 2008 pursuant to s.576C(1)
of the Workplace Relations Act 1996 (the Act). The Minister varied the request on 16 June
2008 and 18 December 2008 pursuant to s.576C(4) of the Act. We shall refer to the request as
amended as the consolidated request. The variations to the consolidated request made on
16 June 2008 were taken into account in the proceedings leading to the making of the priority
modern awards and do not require any further comment at this stage. The variations to the
consolidated request made on 18 December 2008, however, have not been considered in the
award modernisation process so far. They have the potential to affect a number of terms of the
priority modern awards which the Commission made on 19 December 2008. Those terms are,
at least, the coverage clause, the award flexibility clause and the annual leave clause. ...
[8] Clause 33 of the amended request provides that modern awards may require employees, or
allow employees to be required, to take paid annual leave but only if the requirement is
reasonable. The requirement for reasonableness was not part of cl.33 prior to the variations on
18 December 2008. Similarly, it was not taken into account in the making of the priority
modern awards.
[9] We intend to deal with these variations to the consolidated request, and any others that
might be relevant, in making the Stage 2 awards, provided it is practical to do so. We
encourage interested parties to bring forward proposals and submissions as to how these new
requirements should be reflected in the coverage, award flexibility and annual leave clauses.
The Stage 2 exposure drafts do not attempt to take account of the 18 December variations.”
[230] We note that while the above statement referred to variations to the consolidated
request made on 18 December 2008, no specific reference was made to the cashing out of
annual leave.
[231] The following observation was made in the Award Modernisation Full Bench decision
of 3 April 2009:
“The award modernisation process is governed by the provisions in Part 10A of the Workplace
Relations Act 1996 (the Act) and a request made by the Minister for Employment and
Workplace Relations (the Minister) pursuant to s.576C(4) of the Act. The Minister’s request
54
was made on 28 March 2008 and subsequently amended on 16 June and 18 December 2008.
We shall refer to the request as amended as the consolidated request. The priority modern
awards were made by the Commission on 19 December 2008. Because of the timing there was
no opportunity to take the amendment to the request made on 18 December 2008 into account
before publishing the priority modern awards. In its statement of 23 January 2009 the
Commission sought views on how the amendment might affect the terms of modern awards. It
appears that there are three main areas in which the 18 December amendment might have
effect. Those areas are: coverage, award flexibility and annual leave. We deal first with
coverage.”116 (emphasis added)
[232] In a number of subsequent decisions the Award Modernisation Full Bench rejected
proposals to insert cashing out provisions in modern awards, consistent with the views it had
expressed in its 2008 Award Modernisation decision.117 The Award Modernisation Full
Bench did not give any detailed consideration to that part of the 18 December 2008 variation
to the award modernisation request which dealt with the NES provisions in respect of the
cashing out of annual leave.
[233] The Seafood Processing Award 2010 is the only modern award made in the award
modernisation process that contains a provision for cashing out annual leave.118 The clause
was contained in draft awards provided by the Seafood Processors and Exporters Council and
others.119 The clause was not opposed by the relevant unions and was not the subject of any
particular comment in the Full Bench decision which made the award.
[234] The Act now makes specific provision for the cashing out of annual leave. Section 92
provides that paid annual leave “must not be cashed out”, except in accordance with the
cashing out terms included in a modern award or enterprise agreement pursuant to s.93, or an
agreement between an employer and an award/agreement free employee under s.94(1).
[235] Section 93 of the Act provides as follows:
“93 Modern awards and enterprise agreements may include terms relating to cashing
out and taking paid annual leave
Terms about cashing out paid annual leave
(1) A modern award or enterprise agreement may include terms providing for the cashing
out of paid annual leave by an employee.
(2) The terms must require that:
(a) paid annual leave must not be cashed out if the cashing out would result in the
employee’s remaining accrued entitlement to paid annual leave being less than
4 weeks; and
(b) each cashing out of a particular amount of paid annual leave must be by a
separate agreement in writing between the employer and the employee; and
(c) the employee must be paid at least the full amount that would have been
payable to the employee had the employee taken the leave that the employee has
forgone.
...”
55
[236] The model clause proposed by the Employer Group meets the requirements of s.93(2)
of the Act.
[237] Three particular observations may be made about s.93. The first is that it is evident
from the terms of s.93(1) that it was within the contemplation of the legislature that the
Commission may include in modern awards a term providing for the cashing out of paid
annual leave, subject to the inclusion of the prescribed safeguards. In our view the legislative
determination of appropriate safeguards is significant because it represents an important
contextual consideration which was not present when cashing out provisions were considered
during the award modernisation process.
[238] The second observation we would make is that any term providing for the cashing out
of paid annual leave must include the safeguards set out in s.93(2), as a minimum, but a
modern award may also include terms that supplement the NES (see s.55(4)(b)). Accordingly,
if we were persuaded to include a term in modern awards providing for the cashing out of
paid annual leave by an employee, then we could prescribe additional safeguards that are in
addition to the requirements of s.93(2).
[239] The final observation we would make about s.93 is that, subject to the requirements of
s.93(2), an enterprise agreement can include terms providing for the cashing out of paid
annual leave by an employee. The inclusion of such a term in enterprise agreements was
considered by a Full Bench in Armacell Australia Pty Ltd and others.120 The Full Bench dealt
with three appeals against decisions refusing applications for approval of an enterprise
agreement. Each agreement contained terms dealing with the cashing out of annual leave. At
first instance the Commission decided, in each case, that the cashing out of leave provision
was an obstacle to the approval of the agreement. The Commission reasoned that although the
provisions were consistent with s.93, their operation was a matter to be considered when
applying the better off overall test (see ss.186(2)(d) and 193) and, on a proper application of
that test, the cashing out of annual leave was such a significant disadvantage that the
agreement did not meet the better off overall test. The Full Bench held that the Commission
made an error in concluding that the terms of the agreement which met the requirements of
s.93 and did not contravene s.55, nevertheless resulted in the agreement failing to pass the
better off overall test. In short, the Full Bench held that there was no basis for concluding that
the agreement failed the better off overall test because of the annual leave cashing out
provisions. The Full Bench stated that:
“[13] ...While an enterprise agreement may include terms providing for the cashing out of paid
annual leave, the matters in s.93(2) are in the nature of protections for employees and could be
described as safeguards. Annual leave cannot be cashed out if the leave balance would be less
than four weeks, each cashing out must be the subject of a written agreement and there must be
no discounting of the payment. It seems clear, as a matter of interpretation, that the legislature
considered the question of safeguards and that it intended the ones specified in s.93(2) to be
sufficient. It would be inconsistent with that intention to hold that the safeguards are
inadequate and that more or other safeguards should be applied.
[14] The Commissioner was concerned that although the relevant term complied with s.93(2),
situations could occur in which employees might not take annual leave and the purpose of
annual leave might be frustrated. This was an error. Whether the Commissioner’s concern is a
valid one is beside the point. The legislation makes it plain that an enterprise agreement may
include a term for cashing out providing it complies with s.93.”121
56
[240] It needs to be borne in mind that the above observations were made in the context of
an appeal from a decision refusing to approve an enterprise agreement. The Act contains
significant procedural and substantive safeguards to facilitate the making of a democratic and
informed decision on whether an enterprise agreement should be made.122 The question of
whether to insert a cashing out term into modern awards, and if so the features of such a term,
give rise to different considerations. The safeguards provided in s.93(2) set out the minimum
requirements of such a term, they do not constitute a code, and modern awards may also
include terms that supplement the NES. In our view these differences warrant the imposition
of additional safeguards in the modern award context.
[241] We also note that award/agreement free employees are able to enter into arrangements
to cash out their accrued annual leave consistent with s.94 of the Act. Section 94 is in the
following terms:
“94 Cashing out and taking paid annual leave for award/agreement free employees
Agreements to cash out paid annual leave
(1) 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.
(2) 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.
(3) Each agreement to cash out a particular amount of paid annual leave must be a
separate agreement in writing.
(4) 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.
...”
[242] Arrangements which facilitate the cashing out of accrued annual leave (pursuant to
either s.93(1) or s.94(1)) appear to be a relatively common feature of employment conditions
set by enterprise agreements or by individual agreement between an employer and an
award/agreement free employee.
[243] The Workplace Agreement Database contains information on the incidence and
coverage of provisions dealing with the cashing out of annual leave. The Workplace
Agreement Database is a census database compiled by the Department of Employment that
contains information about federal enterprise agreements that have been certified or approved
by the relevant statutory authority since the introduction of enterprise bargaining in 1991.123
On average about 8000 agreements are added by staff of the Department of Employment to
the Workplace Agreement Database each year with around 200 separate data fields coded.
[244] The Workplace Agreement Database shows that of the enterprise agreements approved
between 1 March 2011 and 31 March 2014, about one-third (covering 62.9 per cent of
employees covered by a federal agreement) contained provisions which permit the cashing
out of paid annual leave.
57
[245] On 21 November 2014, the Commission released a background paper which outlined
the parties’ submissions in relation to the cashing out of annual leave and examined the extent
to which such provisions currently exist in enterprise agreements approved by the
Commission. Parties were invited to make submissions on the background paper and a
number did so.124 The background paper included the results of a review by the Commission
of the types of cashing out of annual leave provisions currently found in enterprise
agreements approved by the Commission in the six month period from 1 January to 30 June
2014. In this six month period, 2555 agreements were approved and over one-quarter of these
agreements (26.6 per cent) contained cashing out provisions.
[246] The cashing out provisions in these agreements have generally been drafted to include
the minimum entitlements outlined in the NES, namely that:
each instance of cashing out of annual leave must be by mutual agreement between
the parties and in writing;
the employee’s total accrued annual leave must not be reduced below four weeks as
a result of the cashing out; and
the employee must be paid at least the full amount that would have been paid had
the employee taken the leave.
[247] However a significant proportion of the enterprise agreements which include a term
permitting the cashing out of annual leave contain additional limitations. Of the
118 provisions identified within the March quarter of 2014, 28 (or 23.7 per cent) include
safeguard provisions in excess of those prescribed in the NES. The most common
supplementary safeguard (in 12.7 per cent of agreements) prevent employees from cashing
out more than two weeks of accrued annual leave in any 12 month period, in addition to the
NES requirement that employees maintain an accrued entitlement to four weeks’ leave after
cashing out.
[248] For example, the Joyce Foam Pty Ltd Trading as Joyce Foam Products, Moorebank
Enterprise Agreement 2013125 contains the following clause:
“5.5.2 Employees may request to cash out up to two weeks of their credited annual leave
entitlement every twelve (12) months (or the pro-rata equivalent for part-time employees).
Approval of such requests is at the discretion of the company ...”
[249] Some agreements permit cashing out of annual leave contingent upon particular
circumstances such as financial or personal hardship.126 Some agreements only permit cashing
out when an employee has reached a threshold duration period of employment.127
[250] A further seven of the 118 agreements which provide for the cashing out of annual
leave (5.9 per cent) provide that employees must use a minimum amount of annual leave
before they can cash out any additional leave, or must take an equal amount of leave to that
leave which is being cashed out.128
[251] It is apparent that provisions permitting the cashing out of annual leave are a relatively
common feature of enterprise agreements approved by the Commission. Further, while most
of these terms simply reflect the minimum requirements in s.93, a significant proportion
contain additional limitations, the most common being that employees cannot cash out more
than two weeks’ accrued annual leave in any 12 month period.
58
[252] The provisions in enterprise agreements show that there is some demand for
provisions of this type and illustrate the range of safeguards which may be provided.
However, we are conscious of the need to exercise care when assessing the provisions in
enterprise agreements in the context of a review of modern awards. Enterprise agreements are
negotiated by the parties and approved by the Commission against various statutory criteria.
The legislative context relevant to the review of modern awards is quite different. As the Full
Bench in the Modern Awards Review 2012—Penalty Rates decision observed:
“... in approving agreements the Commission is not making an assessment as to whether the
instrument meets the modern awards objective or would be appropriate in circumstances other
than those applying at the enterprise concerned.”
129
[253] The Employer Group contended that the inclusion of cashing out provisions in modern
awards would:
create equity between award and non-award/agreement employees; and
promote workplace flexibility and the modern awards objective.
[254] We note that the unions opposed the insertion of cashing out of annual leave
provisions in modern awards and we will address their submissions later in this decision.
[255] We are persuaded that the Employer Group’s claim should be granted, subject to some
modifications. The model term will permit the cashing out of annual leave, subject to a
number of safeguards as follows:
1. Cashing Out of Annual Leave
1.1 Paid annual leave must not be cashed out except in accordance with this
clause.
1.2 An employer and an employee may agree to the employee cashing out a
particular amount of the employee’s accrued paid annual leave provided that the
following requirements are met:
(a) each cashing out of a particular amount of accrued paid annual leave must be
by a separate agreement between the employer and the employee which must:
(i) be in writing and retained as an employee record;
(ii) state the amount of accrued leave to be cashed out and the payment to be
made to the employee;
(iii) state the date on which the payment is to be made, and
(iv) be signed by the employer and employee and, if the employee is under 18
years of age, the employees’ parent or guardian;
(b) the employee must be paid at least the full amount that would have been
payable to the employee had the employee taken the leave at the time that it is
cashed out;
59
(c) paid annual leave must not be cashed out if the cashing out would result in the
employee’s remaining accrued entitlement to paid annual leave being less than
4 weeks; and
(d) employees may not cash out more than two weeks’ accrued annual leave in
any 12 month period.
Note 1: Under s.344 of the Fair Work Act 2009, an employer must not exert undue
influence or undue pressure on an employee to make an agreement to cash out paid
annual leave under this award clause.
Note 2: Under s.345 of the Fair Work Act 2009, a person must not knowingly or
recklessly make a false or misleading representation about an employee’s workplace
rights under this award clause.
[256] The model term meets the requirements of s.93(2) of the Act. A modern award may
also include terms that supplement the NES (see s.55(4)(b)), and on that basis the model term
incorporates four additional safeguards, that are in addition to the requirements of s.93(2).
[257] First, a maximum of two weeks’ paid annual leave can be cashed out in any 12 month
period. In the case of part-time employees, the two weeks’ leave is based on the employees’
weekly ordinary hours (see s.87(2) of the Act). As noted earlier, the most common
supplementary safeguard in enterprise agreements which permit the cashing out of annual
leave is a limitation upon the amount of leave which can be cashed out in any 12 month
period. Such a limitation is directed at ensuring that employees take at least half of their
accrued annual leave, as leave.
[258] Second, there are requirements in the model term about the content of any agreement
to cash out accrued annual leave (subclause 1.2(a)) and the employer’s obligation to keep
such agreements as an employee record (subclause 1.2(a)(i)). These requirements are
consistent with an employer’s existing obligations under Regulation 3.36(2) of the Fair Work
Regulations 2009. Regulation 3.36(2) states:
“If an employer and employee agree to cash out an accrued amount of leave:
(a) a copy of the agreement is a kind of employee record that the employer must make and
keep; and
(b) a kind of employee record that the employer must make and keep is a record that sets out:
(i) the rate of payment for the amount of leave that was cashed out; and
(ii) when the payment was made ...”
[259] Third, if the employee is under 18 years of age the agreement to cash out a particular
amount of accrued paid annual leave must be signed by the employees’ parent or guardian. A
safeguard of this type was proposed by the ACTU and CFMEU. Ai Group and ACCI
submitted that such a provision was unnecessary,130 however, other employer representatives,
from the hospitality sector, either had no objection to the inclusion of such a safeguard or
endorsed it as an appropriate protection for young workers.131 There is a similar safeguard in
the model flexibility term in modern awards and it is appropriate that such a safeguard be
included in the model term dealing with the cashing out of annual leave.
60
[260] Finally, the two notes at the end of the model term draw attention to the general
protections in Part 3-1 of the Act against undue employer influence and misrepresentation in
relation to rights under the clause. As observed earlier, such notes can be considered
incidental terms within the meaning of s.142 of the Act and/or terms that are ancillary or
incidental within the meaning of s.55(4), and assist in ensuring that the operation of the
modern award clause is easy to understand (s.134(1)(g)). As we have also observed earlier, it
seems to us that the effectiveness of any safety net is substantially dependent upon those who
are covered by it being able to know and understand their rights and obligations.
[261] The general protections provisions apply to an agreement to cash out annual leave in
accordance with a term of a modern award. In particular s.344 provides, relevantly:
“An employer must not exert undue influence or undue pressure on an employee in relation to a
decision by the employee to:
... (b) make, or not make, an agreement or arrangement under a term of a modern
award...that is permitted to be included in the award...under subsection 55(2)...”
[262] In addition, s.345 provides:
“(1) A person must not knowingly or recklessly make a false or misleading representation
about:
(a) the workplace rights of another person; or
(b) the exercise, or the effect of the exercise, of a workplace right by another
person; or
...
(2) Subsection (1) does not apply if the person to whom the representation was made
would not be expected to rely upon it.”
[263] Relevantly for present purposes, under s.341(1) of the Act, a person has a “workplace
right” if the person is entitled to the benefit of, or has a role or responsibility under, a modern
award.
[264] Sections 344 and 345(1) are civil remedy provisions (see s.539).
[265] The variation of modern awards to incorporate the model term will ensure that each
modern award provides a fair and relevant minimum safety net. In so deciding we have taken
into account the s.134 considerations, insofar as they are relevant, and we are satisfied that
such a variation is necessary to achieve the modern awards objective. We are also satisfied
that the model term is consistent with the objects of the Act. We propose to address the
relevant statutory considerations before dealing with the submissions of those who opposed
the Employer Group’s claim.
[266] As we have mentioned, the insertion of the model term will ensure that each modern
award provides a “fair and relevant minimum safety net”. The model term is “fair” because of
the various safeguards provided within the term itself and because it facilitates the making of
mutually beneficial agreements between an employee and his or her employer. Employees
benefit by being able to exercise a preference they may have to receive cash rather than take
leave and employers benefit by being able to reduce their contingent liabilities. The mutual
61
benefits which may flow from such arrangements provide an explanation for why such
provisions are a relatively common feature of enterprise agreements approved by the
Commission.
[267] The insertion of the model term will ensure that modern awards are “relevant” to the
needs of the modern workplace. The evidence indicates that there is a significant demand for
a provision which facilitates the cashing out of accrued leave.
[268] Questions 5–8 of the Employer Survey are directed at the cashing out of annual leave,
as follows:
“Since 1 January 2010, have any of your organisation’s employees asked to cash out a portion
of their annual leave? Choose one of the following answers.
Yes
No
Unsure
If yes, how many requests have you received?
1
2–4
5–20
20+
What percentage of these requests have been granted?
none
1–25%
26–50%
51–75%
75%+
Unsure
If requests have been refused, what has been the reason or reasons giving rise to the refusal?
Tick each appropriate box:
The employee had less than 4 weeks of annual leave accrued.
We were unable to agree because of our award or agreement does not permit cashing
out of leave.
The Company does not wish to allow employees to cash out annual leave.
Other. Please specify: _________________________”
[269] Some 1863 employers (45 per cent of all responses) stated that since 1 January 2010
they had received at least one employee request to cash out a portion of their annual leave. Of
those employers who had received at least one such request, over 1412 employers had
received between 2 and 20 requests and 153 employers had received over 20 such requests.
[270] A significant number of the requests to cash out annual leave were not granted.132
[271] The responses to Question 8 of the Employer Survey are set out below:
62
If requests have been refused, what was the reason or reasons for the refusal?
Count %
The employee had less than 4 weeks of annual leave accrued 651 15.74
We were unable to agree because our award or agreement did not permit
cashing out of leave
499 12.06
The Company does not wish to allow employees to cash out annual
leave
160 3.87
Other 700 16.92
[272] We have already mentioned the practical problem which arises in relation to the
responses to Question 8 (see paragraph [46] above) but it is apparent that in a significant
proportion of cases a request to cash out annual leave was refused because the relevant award
or agreement did not expressly permit it. The evidence of Ms Kristina Flynn, Ms Fiona
Corbett and Ms Melissa Adler dealt with issues raised by employer members of their
respective organisations.
[273] Ms Kristina Flynn is the National Manager of BIZassistInfoline, Ai Group’s national
workplace relations telephone advisory service for Ai Group members. The BIZassistInfoline
is operated by 15 workplace advisers who provide advice on all workplace related issues,
including leave entitlements. The BIZassistInfoline has received about 199 740 calls since
1 January 2010. The details of each call are logged. A report of all calls to the
BIZassistInfoline since 1 January 2010 showed that 5794 calls were about annual leave, of
which 1058 were about the cashing out of annual leave. Approximately half (521) of the calls
about the cashing out of annual leave concerned employees in circumstances where an award
applied to their employment. In her evidence Ms Flynn stated:
“In my experience it is not uncommon for employers to call the BIZassistInfoline to ask
whether they can agree to requests from employees, to whom a modern award applies, to cash
out their annual leave.” 133
[274] Ms Fiona Corbett gave evidence about the operation of the Workplace Advice Unit
operated by Australian Business Lawyers & Advisors Pty Ltd on behalf of Australian
Business Industrial and the NSW Business Chamber. The Workplace Advice Unit performs
essentially the same function as Ai Group’s BIZassistInfoline for the members of the
employer organisations mentioned. In the 12 month period 1 June 2013 to 31 May 2014, the
Workplace Advice Unit in Sydney took 511 calls relating to annual leave and of these 91
were about the cashing out of annual leave. The majority of such calls were about “whether an
award covered employee was able to cash out their annual leave”. In her evidence Ms Corbett
stated:
“Based on the enquiries that I have answered in relation to cashing out annual leave whilst
working in the Workplace Advice Unit answering queries on numerous awards and from
enquiries that the other advisors have received, I have found that:
(a) most calls follow an employee’s request to cash out their annual leave;
in a large number of cases, the employee’s request is made as the result of a financial
or personal hardship.”134
63
[275] In terms of the particular matters referred to in the modern awards objective, we are
persuaded that the model term meets the needs of the low paid (consistent with s.134(1)(a)).
[276] As noted in the Annual Wage Review 2013–14 decision, a sizeable proportion of
award-reliant workers are low paid and low-wage households typically report more financial
stress than higher wage households.135 The ability to cash out up to two weeks’ accrued
annual leave each year will provide low-paid employees with some additional capacity to
meet unexpected financial demands and may also provide the money to enable them to take a
holiday.
[277] In its submission of 27 November 2014 the ACTU contended that “concerns about
award-dependent employees facing financial hardship could be easily addressed through an
increase in the minimum wage and not by including cashing out provisions in modern
awards”.136 The adjustment of minimum wages is not as simple as the ACTU submission
might suggest. The Act requires the Expert Panel to take into account a number of
considerations in reviewing modern award minimum wages and the national minimum wage
order. As the Expert Panel observed in the Annual Wage Review 2013–14 decision:
“It is important to appreciate that there is often a degree of tension between the economic, social
and other considerations which the Panel must take into account. For example, a substantial
wage increase may better address the needs of the low paid and improve the relative living
standards of award-reliant employees, but it may (depending upon the prevailing economic
circumstances) also reduce the capacity to employ the marginalised and hence reduce social
cohesion. It is this complexity that has led the Panel to reject a mechanistic or decision rule
approach to wage fixation, such as the adoption of real wage maintenance. The real wages of
award-reliant employees are relevant to our task, but not determinative. The range of
considerations we are required to take into account calls for the exercise of broad judgment
rather than a mechanistic approach to fixing minimum wages.”137 (references omitted)
[278] We deal with the need to promote collective bargaining (s.134(1)(b)) later in
addressing the submissions opposing the Employer Group’s claim.
[279] We are also satisfied that the model term reflects flexible modern work practices and
accordingly the insertion of such a term in modern awards will promote such practices,
consistent with s.134(1)(d).
[280] Section 134(1)(f) is also relevant. It provides that we must take into account:
“the likely impact of any exercise of modern award powers on business, including on
productivity, employment costs and the regulatory burden ...”
[281] As the model term will facilitate agreements to cash out accrued leave it will, when
utilised, reduce the employer’s contingent liabilities. ACCI and others138 submitted that a term
which permits the cashing out of accrued leave will reduce employment costs and the
regulatory burden on employers. We accept that the insertion of the model term in modern
awards will have such an impact.
[282] A number of parties supporting the Employer Group’s claim asserted that granting the
claim would improve productivity. No merit argument was advanced in support of such
assertions and the connection between an award provision permitting the cashing out of
accrued annual leave and productivity is not obvious to us.
64
[283] “Productivity” is not defined in the Act, but given the context in which the word
appears it is clear that it is being used to signify an economic concept. It may be regarded as a
technical word and hence evidence may be admitted to interpret its meaning.139
[284] The legislative context is also important. The modern awards objective provides that
the Commission must take into account the likely impact of any exercise of modern award
powers on business, including on productivity, employment costs and the regulatory
burden.140 The reference to both “productivity” and “employment costs” within the same
provision recognises that the cost of labour constitutes a separate and distinct statutory
consideration to productivity.
[285] As noted in the Annual Wage Review 2012–13 decision:
“... the term productivity, as used in the Act, is directed to the economic concept of the
quantity of output relative to the quantity of inputs.141 Considerations of the price of inputs,
including the cost of labour, raise separate statutory considerations relating to the performance
and competitiveness of the national economy and other economic considerations, such as
inflation.”142
[286] On the limited material before us we are not persuaded that either the Employer
Group’s claim or the model term will have any positive impact on productivity.
[287] The insertion of the model term into modern awards is also consistent with the objects
of the Act. In particular the model term acknowledges “the special circumstances of small and
medium-sized businesses” (s.3(g)). Absent the insertion of the model term, such businesses
could only permit their modern award covered employees to cash out their accrued paid
annual leave by entering into an enterprise agreement. In this context we acknowledge the
force of ACCI’s submission that the reluctance of particular businesses to collectively bargain
can arise from various factors including “small business employers lacking the expertise and
resources to implement an enterprise agreement”.143
[288] The ACTU rejected the proposition that small businesses encountered difficulties in
engaging in collective bargaining and pointed to the extent of small businesses who utilised
Australian Workplace Agreements (AWAs) introduced by the WR Act. In support of this
submission the ACTU relied on a report by Mitchell and Fetter.
[289] Mitchell and Fetter found that “most employers with AWAs were small and medium
size businesses”.144 However, as the authors note, this understates the importance big business
is the utilisation of AWAs: ‘whilst big business constitutes only the smaller proportion of
businesses with AWAs, they nevertheless cover the largest proportion of employees with
AWA coverage’. It is also relevant to observe that the use of AWAs tended to be concentrated
in particular sectors of the economy. As Mitchell and Fetter noted:
“Despite the increasing trend in the rate of approvals, AWAs statistically constitute only a very
minor aspect of Australian industrial regulation, covering a tiny proportion of the workforce
(1.9%). Whilst the uptake of AWAs has reached into most parts of the economy to some
degree, they tend to be only of importance in terms of concentration (by employee) in
communication services, government, mining cultural and recreational services, and
electricity, gas and water. Key areas of industry such as construction retail, transport and
65
manufacturing by contrast have relatively low levels of AWA penetration”.145 (references
omitted)
[290] We are not persuaded that the Mitchell and Fetter report supports the ACTU’s
contention. As the report states, key areas of the economy—including award reliant sectors—
had low levels of AWA penetration. Further, there are significant differences between the
legislative framework which applied to AWAs146 and Part 2-4 of the FW Act dealing with
enterprise agreements.
[291] During these proceedings the Commission produced an information note entitled
‘Bargaining by business size’. The note was available on the Review section of the
Commission’s website and interested parties were able to comment on the note and its
relevance to these proceedings. The note indicated that the Australian Bureau of Statistics
(ABS) Employee Earnings and Hours publication collects information on a range of data
including the number of employees by method of setting pay and in what sized business they
are employed in Australia. The methods of pay collected are:
Award only;
Collective agreement;
Individual arrangement; and
Owner manager of incorporated enterprise.
[292] The ABS definition of a “collective agreement” encompasses collective agreements
registered at the state or federal level as well as unregistered written or verbal collective
agreements.147
[293] Employees are allocated to the collective agreement category if they had the main part
of their pay set by a registered or unregistered collective agreement or enterprise award.148
[294] The ABS definition of individual arrangements includes individual contracts, letters of
offer and common law contracts (which also includes overaward payments).149
[295] The ABS definition of an award-only arrangement is where a state or federal award is
the predominate mechanism used to set the pay and/or conditions and where that employee is
paid at exactly the rate of pay specified in the award.150
[296] An “owner manager of incorporated enterprise” is defined as:
“A person who works in their own incorporated enterprise - that is, a business entity
which is registered as a separate legal entity to its members or owners (also known as a
limited liability company) ...”151
[297] The ABS Employee Earnings and Hours publication collects business size data
according to the following splits:
Under 20 employees;
20–49 employees;
50–99 employees;
100–999 employees; and
1000 and over employees.
66
[298] The size splits collected reflect the ABS definition of a small business, which is a
business that employs fewer than 20 persons.152
[299] The most recent data show that, in May 2014, the majority of employees in small
businesses were employed on individual arrangements, with a small proportion of employees
on collective agreements (see Chart 3). The number of employees in small businesses on
collective agreements and individual arrangements were 126 700 and 1 393 200
respectively.153
Chart 3: Proportion of employees with their pay set by method of setting pay and
business size—May 2014
Note: Data on method of setting pay by business size exclude owner managers of incorporated businesses.
Source: ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No. 6306.0.
[300] Chart 3 demonstrates that there is a positive correlation between business size and
collective agreements, with an increase in business size associated with an increase in the
proportion of employees on collective agreements.
[301] Relatively few employees employed in small businesses are covered by a collective
agreement. This supports our earlier observation about the practical impediments facing small
businesses that wish to enter into such agreements. A modern award variation of the type we
propose will ensure that all employees have access to cashing out arrangements.
[302] It seems to us to be somewhat anomalous that award-free employees and agreement-
covered employees can negotiate arrangements permitting the cashing out of accrued annual
leave, but employees whose terms and conditions of employment are regulated by a modern
award cannot. Some of the practical difficulties which may arise from this differential
treatment are highlighted in BHP Billiton’s submission of 27 November 2014:154
0
10
20
30
40
50
60
70
80
90
100
Under 20
employees
20 - 49 employees 50 - 99 employees 100 - 999
employees
1 000 and over
employees
Per cent
Award only Collective agreement Individual arrangement
67
“BHP Billiton has a large collective agreement-covered workforce who are entitled to have
cashing out of annual leave terms included in enterprise agreements through bargaining. BHP
Billiton also employs managerial, professional and administrative staff whose employment is
generally not the subject of any collective agreement. These staff members may be covered by
one or other modern award. They have no equivalent access to cashing out of annual leave in
the absence of any modern award term dealing with the matter.
BHP Billiton submits that it was not Parliament’s intention for the type of industrial
instrument governing an employee’s employment to dictate whether or not the employee can
exercise a choice to cash out annual leave. It is anomalous that, within a workforce, an
employer could offer one group of employees the ability to access this choice through
enterprise bargaining but would not be able to offer the facility to another group, or even
accept individual requests from within that group, because the modern award lacks a provision
dealing with cashing out.”
[303] In this context we note that the ACTU submitted that the major difference between
award-covered employees and award-free or agreement-covered employees is that the latter
typically have “significantly more industrial ‘power’ than their colleagues who are award
reliant”; award/agreement free employees are “likely to have significantly more bargaining
power due to their personal or individual status” which enables them to achieve positive
industrial outcomes, and agreement covered employees “achieve their industrial ‘power’
through collective bargaining”. Therefore, the ACTU submitted that arguments based on
providing parity or equity are “misconceived”.155 We acknowledge that such a distinction can
be made, but, even if this is so, that does not make the current situation any less anomalous,
and we have addressed the difference in bargaining power by the additional safeguards
provided in the model term.
[304] The union parties opposed the claim advanced by the Employer Group on two broad
bases:
if granted the claim would undermine the purpose of annual leave; and
granting the claim would be inconsistent with the encouragement of enterprise
bargaining.
Undermining the purpose of annual leave
[305] The ACTU’s fundamental objection to the insertion of any provision in modern
awards which facilitates the cashing out of annual leave was that such a provision would
undermine the NES minimum entitlement to annual leave by converting annual leave into “a
financial figure, rather than an entitlement”. The essence of the ACTU’s submission is set out
in its submission in reply:156
“Frustrating the purpose of a safety net entitlement such as annual leave in a modern award has
the potential to do significant damage to the basic rights and entitlements of employees.
Regardless of whether or not the safeguards in sections 92 and 93 are applied, the purpose of
annual leave will be frustrated; it will become nothing more than a payment to employees and
will lose its long established importance and benefit as a break from work ...
We submit that no matter which or how many safeguards apply, the cashing out of annual
leave in the safety net will do significant damage to the entitlement.”
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[306] The AMWU also contended that cashing out eliminates annual leave taken for rest and
recreation and does not address the underlying reasons for the accumulation of large leave
balances.157 The AMWU further submitted that the proposed Employer Group’s claim “can
result in serial cashing out of annual leave, and thus eliminate the taking of leave altogether”
and that:
“The employer group proposal gives only a safeguard of requiring a leave balance of four
weeks, but would not stop an employee from cashing out all leave accrued thereafter. The
possibility of such an outcome should be avoided. Any acceptable safety net must require that
a minimum amount of leave has actually been granted by the employer and taken by the
employee.”158
[307] The Construction, Forestry, Mining and Energy Union (CFMEU)159 and the Textile,
Clothing and Footwear Union of Australia (TCFUA)160 also raised concerns about the
potential for serial cashing out in the event that the Employer Group’s claim was granted.
[308] The ACTU’s submissions also addressed what it characterised as the “failings” of the
Employer Group’s proposed clause. In particular:
the clause has no safeguard to ensure that employees ever actually take a period of
rest and recreation;
there are no protections to ensure that employees are not pressured into cashing out
annual leave; and
requiring a written agreement for each cashing out is a mere formality and offers no
real protection against abuse.161
[309] In relation to the last of the points made about the Employer Group’s proposed clause,
the ACTU asserted that it is unlikely that a written agreement will actually be entered into on
each occasion that leave is cashed out. In support of its contention that the Employer Group’s
proposed clause could be abused, the ACTU relied on a single enquiry received by its
Member Connect service sometime in 2012–13.162
[310] We do not find these submissions persuasive.
[311] We turn first now to the proposition that facilitating the cashing out of annual leave
would undermine the NES entitlement to leave. In our view this submission is misconceived.
[312] We acknowledge that the purpose of annual leave is to provide a period of rest and
recovery from work and, from a work-life perspective, employees need the time and
opportunity to attend to their family and other commitments and to engage in social,
community and personal interests. We also agree with the proposition that it is important that
employees take their accrued annual leave and we have dealt with measures to facilitate the
taking of leave in the previous part of this decision. But it is important to appreciate that the
relevant standard is set by the NES.
[313] The NES provisions relating to annual leave (ss.86–94) set out the minimum
entitlement to annual leave for employees (other than casual employees) and expressly permit
the cashing out of such an entitlement in ss.93 and 94. As the ACTU correctly observed, the
inclusion of such a facilitative provision in a modern award is permitted rather than mandated.
But such a distinction misses the point. The enactment of s.93 is a clear legislative statement
69
that a modern award term which permits the cashing out of accrued annual leave, and meets
the minimum requirements of s.93(2), is consistent with the NES entitlement to annual leave.
Far from frustrating the purpose of a safety net entitlement, as asserted by the ACTU, the
legislature has clearly contemplated that a modern award provision such as the cashing out
model term may be part of the safety net.
[314] In support of its general proposition that a modern award provision which facilitates
cashing out would undermine the NES, the ACTU relied on the observations of the Award
Modernisation Full Bench in its 2008 Award Modernisation decision, when it decided not to
adopt a model provision to permit the cashing out of annual leave.163 As we have already
observed, because of the timing of the 18 December 2008 variation to the award
modernisation request (which set out the safeguards which now appear in s.93(2)), that
variation was not taken into account in the 2008 Award Modernisation decision of
19 December 2008.
[315] The ACTU also submitted that a subsequent decision by the Award Modernisation
Full Bench to refuse to vary the Meat Industry Award 2010164 (the Meat Award) to provide
for cashing out of annual leave supports this proposition, as the Full Bench in that matter “had
seen and/or considered the safeguards that are replicated in the provisions of the Act ...”.165
An examination of the decision does not support this contention. After referring to the
observations made in the 2008 Award Modernisation decision, the Full Bench dismissed an
application by the Australian Meat Industry Council to vary the Meat Award to include a
provision for cashing out of annual leave. The Full Bench’s reasons are encapsulated in the
following passage from its decision:
“[11] We have consistently expressed misgivings about cashing out of annual leave being
included in safety net awards. Those misgivings are heightened in circumstances where there
is no argument advanced in support and opposition exists to its inclusion. No such provision is
contained in any of the awards which were considered in the modernisation process. In all the
circumstances we have decided not to grant the application.”166
[316] The decision contains no reference to the safeguards now contained in s.93(2) and on
that basis it cannot be assumed that they were the subject of any consideration by the Full
Bench.
[317] The decisions of the Award Modernisation Full Bench must be considered in context.
When viewed in this way it is apparent that, for various reasons, the safeguards which are
now set out in s.93(2) were not the subject of any particular consideration by that Full Bench.
[318] That said, we acknowledge and agree with the observation of the Award
Modernisation Full Bench that some caution is appropriate when dealing with this issue at the
award safety net level. We accept the proposition that there are significant differences
between the modern award context and enterprise bargaining. As noted earlier, the Act
contains significant procedural and substantive safeguards to facilitate the making of a
democratic and informed decision on whether an enterprise agreement should be made.167 In
our view these differences warrant the imposition of additional safeguards in the modern
award context and that is the course we have adopted.
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[319] We acknowledge that the ACTU sought a number of further safeguards—that is in
addition to the safeguards we have incorporated into the model term. In particular the ACTU
proposed five further safeguards:
(i) that any provision should have a “sunset date” of 31 December 2018 so that the
provisions can be considered and reviewed during the next 4 yearly review of modern
awards;
(ii) there must only be the possibility of cashing out annual leave once every three
years;
(iii) an employee who elects to cash out annual leave must have taken annual leave
of “at least four weeks, or five or six or another amount if the employee is a non-
standard worker, in the 12 months prior to cashing out”;
(iv) cashing out cannot be a condition of employment; and
(v) cashing out provisions should not be inserted into modern awards which
contain other mechanisms for reducing annual leave balances, such as excessive leave
terms or close down provisions.168
[320] We are not persuaded to adopt any of these proposals. The first and fourth proposed
safeguards are unnecessary. Any interested party can seek to vary or revoke the cashing out
model term in the context of the next 4 yearly review. Cashing out cannot be a ‘condition of
employment’, as the model makes clear each cashing out of a particular amount must be the
subject of a separate agreement.
[321] The second and third proposed safeguards would place unwarranted restrictions on the
ability to cash out paid annual leave and no persuasive merit argument was advanced in
support of the restrictions proposed. We note that the model term we have determined
includes a limitation on the amount of paid annual leave which can be cashed out in any
12 month period.
[322] As to the final proposal, it proceeds on a false premise in that it assumes that the only
purpose of inserting the model term is to reduce excessive leave balances—that is not the
case. As we have mentioned, the model term facilitates the making of mutually beneficial
agreements. While such agreements enable employers to reduce their contingent liabilities,
employees obtain the benefit of being able to exercise a preference they may have to receive
cash rather than take leave.
[323] We now turn to the ACTU’s submissions about the “failings” of the Employer
Group’s proposed clause (see paragraph [308] above).
[324] It is convenient to deal with the ACTU’s last point first. The Member Connect enquiry
does not support the ACTU’s contention. If the facts asserted are correct, and the employee
concerned was a national system employee, then the employer concerned was clearly acting
unlawfully. Paid annual leave can only be cashed out in accordance with the terms of a
modern award or enterprise agreement, or by an agreement between an employer and an
award/agreement free employee (s.92). Each cashing out of a particular amount of paid leave
must be by a separate agreement in writing, between the employer and employee (see
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ss.93(2)(b), 94(1) and (3) and reg.3.36(2)). The insertion of the model term will not make
such unlawful behaviour more prevalent. Indeed, by clearly spelling out the circumstances in
which accrued annual leave may be cashed out, the model term is more likely to promote
compliance with the statutory scheme rather than non-compliance.
[325] Nor is there any evidentiary basis for the ACTU’s assertion that it is unlikely that a
written agreement will actually be entered into. There was no suggestion of any non-
compliance with the cashing out provisions in existing enterprise agreements or with the
terms of s.94 in relation to award/agreement free employees. Nor did the ACTU point to any
compliance problems in relation to the cashing out provisions under s.233 of the WR Act.
[326] As to the other two asserted “failings” of the Employer Group’s proposed clause, these
issues have been adequately addressed in the model term. The model term limits the amount
of annual leave which may be cashed out in any 12 month period. For a full-time employee
only two weeks’ may be cashed out every 12 months, and hence such an employee will either
accrue or take at least two weeks’ paid annual leave every 12 months (clause 1.2(d)). This
safeguard is directed at preventing what the AMWU and others described as the potential for
serial cashing out. The model term does not compel employees to take a minimum period of
paid annual leave each year, but neither does the NES.
[327] The two notes at the end of the model term refer to the general protections in the Act
which prevent employees from being pressured into cashing out their paid annual leave
entitlements.
Incentive to bargain
[328] The ACTU contended that inserting cashing out provisions into the modern awards
will remove an incentive to bargain:
“[T]he provisions of the FW Act which provide for enterprise bargaining assume that certain
flexibilities or conditions of employment are not appropriate for inclusion in the safety net ...
Bargained outcomes should only be included in modern awards where this is necessary to
achieve the MAO of providing a fair and relevant safety net and not simply because of the
difficulties or perceived difficulties faced by parties engaged in collective bargaining.”169
[329] The ACTU also submitted that inserting a cashing out provision in modern awards
would undermine the objects of the Act (particularly s.3(f)) as it would act as a disincentive
for an employer to engage in enterprise-level collective bargaining and that the safety net
must be set at a level which encourages parties to collectively bargain to seek provisions
which differ from the safety net. 170
[330] We acknowledge that one of the particular matters we are required to take into account
is “the need to encourage collective bargaining” (s.134(1)(b)).
[331] However, as we have mentioned, no particular primacy is attached to any of the
matters the Commission is required to take into account in paragraphs 134(1)(a)–(h). The
Commission’s task is to balance the various considerations and ensure that modern awards,
together with the NES, provide a fair and relevant minimum safety net of terms and
conditions. An award term of the type we propose will not necessarily discourage collective
bargaining. The setting of an appropriate safety net provision may create an incentive to enter
into an enterprise agreement in order to tailor the provision to better meet the needs of a
72
particular enterprise, subject to meeting the minimum requirements set out in s.93(2). We
acknowledge that the insertion of the model term in modern awards may impact upon the
incentive to bargain about the cashing out of annual leave. This is a relevant consideration,
and we have taken it into account, but it is not determinative. In our view the considerations in
favour of inserting the model term into modern awards outweigh any potential reduction in
the incentive to bargain about this issue.
[332] For the reasons given we are satisfied that the variation of all modern awards to insert
the model term is necessary to achieve the modern awards objective.
[333] We note that the Employer Group’s claim sought to vary 120 of the 122 modern
awards to insert a provision to facilitate the cashing out of annual leave. The Seafood
Processing Award 2010 was not sought to be varied as it already contains a cashing out
provision (it is the only modern award that does so). The Passenger Vehicle Transportation
Award 2010 was also omitted from the Employer Group’s list of modern awards to be varied.
This award does not currently contain a cashing out provision and no reason was provided for
its omission. During the course of oral argument Ai Group were seeking to insert the model
cashing out term in all modern awards except the Seafood Processing Award 2010.171 We also
note that the Australian Public Transport Industrial Association appeared in the proceedings
and supported the position put by ACCI and Ai Group in respect of the ACTU claim
regarding the payment of annual leave entitlements on termination.
[334] During the course of these proceedings all parties were put on notice as to the
Commission’s concerns regarding the adequacy of the safeguards in the Employer Group’s
claim. Subject to the requirements of procedural fairness, we are not bound by either the terms
of the relief sought by a party or by the scope of the variations proposed.
[335] We see no reason for excluding the awards mentioned from the variations we propose.
The cashing out provision in the Seafood Processing Award 2010 does not contain sufficient
safeguards and a variation is necessary to meet the modern awards objective. On the material
before us the omission of the Passenger Vehicle Transportation Award 2010 from the awards
sought to be varied by the Employer Group was simply an error.
4.3 Annual close-down
[336] The Employer Group sought to insert a model “close-down” clause into 65 modern
awards (see Attachment G for the list of modern awards). The proposed model clause is in the
following terms:
“Annual Leave Close-Down
(a) An employer may close down (or reduce to a nucleus) an enterprise or a part of it for
the purpose of allowing paid annual leave to all or a majority of employees in the
enterprise or part of it, provided that:
(i) the employer gives the employees at least four (4) weeks’ notice of its
intention to close down;
(ii) in the case of any employee employed after notice has been given, notice must
be given to that employee on the date they are offered employment.
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(b) Where an employee has been given notice pursuant to clauses X.X(a)(i) or (ii) above
and the employee has:
(i) accrued sufficient annual leave to cover the full period of closing, the
employee must take paid annual leave for the full period of closing;
(ii) insufficient accrued annual leave to cover the full period of closing, the
employee must take paid annual leave to the full amount accrued and leave
without pay for the remaining period of the closing; or
(iii) no accrued annual leave, the employee must take leave without pay for the
full period of closing.
(c) Public holidays that fall within the period of close down will not count as a day of
annual leave or leave without pay. Employees will be paid for any absence on such
days in accordance with the NES.” 172
[337] In relation to subclause (c) of the proposed clause, the Employer Group confirmed that
this was not intended to reduce any existing entitlements concerning public holidays and it
was conceded that the provision may need to be modified to achieve that end.173
[338] The 65 modern awards sought to be varied are, in effect, split into two categories:
41 modern awards that do not presently contain any provisions allowing employers
to implement an annual close-down;174 and
24 modern awards that do contain provisions regarding an annual close-down, but
the existing modern award provisions do not provide the same level of flexibility as
the model clause.
[339] The purpose of the proposed provision is said to be to enable businesses to shut down
and require annual leave to be taken at the best time in terms of production or service delivery
fluctuations. It is on that basis that it was submitted that the “close-down” proposal is not
directed at the same issue being canvassed by the variations proposed to address excessive
leave balances and should not be seen as an alternative to that claim.175
[340] The 57 modern awards that are not subject of the proposed variations already contain
provisions allowing employers to implement annual close-downs and no variations are
proposed in those awards.
[341] The ACTU and a number of individual unions opposed the Employer Group’s claim.
[342] We propose to deal with the relevant historical and legislative context before turning
to the merits of the claim.
[343] An annual close-down provision (also referred to as a “shut down”) was introduced
into the WR Act by the Work Choices Act in 2006. The AFPCS provided that an employer
had a right to direct employees to take leave during a shut down for the whole, or part, of its
business. Section 236(5) of the WR Act provided:
“Shut downs
(5) An employee must take an amount of annual leave during a particular period if:
74
(a) the employee is directed to do so by the employee’s employer because, during
that period, the employer shuts down the business, or any part of the business,
in which the employee works; and
(b) at least that amount of annual leave is credited to the employee.”
[344] Annual close-down provisions were also in some awards prior to the Work Choices
Act amendments. For example the Metal Industry Award 1971 was varied in 1977 to include
such a provision.176
[345] During the award modernisation process, the Award Modernisation Full Bench, in its
2008 Award Modernisation decision, stated that the “provisions in awards and NAPSAs
governing annual close-downs vary significantly”.177 The Full Bench went on to say it had
“adopted the approach of attempting to identify an industry standard in each case” which is
why there may be “some variation in the close-down provisions”.178
[346] An example of how the Award Modernisation Full Bench decided to include a close-
down provision is in the pest control industry. In making the Pest Control Industry Award
2010 the Full Bench decided to include an annual close-down provision.179 Prior to the
making of the modern award, three of the six pre-reform federal awards and NAPSAs in this
industry contained close-down provisions. These included the South Australian and New
South Wales NAPSAs and the Victorian pre-reform federal award. The South Australian
NAPSA, the Pest Control Award, required an employer to give an employee six weeks’
notice before closing down for a period of time.180 The modern award provision for annual
close-down, however, reflects the Victorian pre-reform federal award and requires four
weeks’ notice.
[347] At present, 81 modern awards contain provisions for close-down and 41 modern
awards do not.181
[348] The Act does not contain a specific provision in relation to “shut downs” or “close-
downs”, but s.93(3) provides that a close-down provision may be included in modern awards
and enterprise agreements; it reads:
“Terms about requirements to take paid annual leave
(3) A modern award or enterprise agreement may include terms requiring an employee, or
allowing for an employee to be required, to take paid annual leave in particular circumstances,
but only if the requirement is reasonable.”
[349] The Explanatory Memorandum to the Fair Work Bill 2008 makes it clear that the
subsection was intended to encompass close-down provisions. One of the examples provided
in the Explanatory Memorandum was a term which enabled an employer to require an
employee to take a period of leave in circumstances where the employer decided to “shut
down the workplace over the Christmas/New Year period” (see paragraph [91] above). We
return to s.93(3) shortly.
[350] We also note that s.139(1)(h) provides that a modern award may include terms about
“leave, leave loadings and arrangements for taking leave”.
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[351] We now turn to the submissions advanced in respect of the Employer Group’s claim.
[352] The ACCI and Ai Group submissions advanced a number of arguments in support of
the Employer Group’s claim. These submissions can be conveniently distilled into seven
broad lines of argument.
[353] First, it was contended that provisions similar to the proposed model close-down term
are already contained in many modern awards, including the Asphalt Industry Award 2010,
and were adopted by the Full Bench of the Commission during the Transitional Review in
varying 18 awards.182
[354] In relation to this point we would observe that the Transitional Review—Annual Leave
decision did not endorse the close-down provision in the Asphalt Industry Award 2010 as an
appropriate model term. The Full Bench simply dealt with an anomaly or technical problem
arising from the Part 10A award modernisation process. The issue at the heart of the Full
Bench decision was that the obligation under the NES to accrue annual leave progressively
and make payment at the employee’s base rate of pay gave rise to an argument that the
existing award provision provided for an additional payment over and above the amount that
would otherwise be payable for an absence on annual leave. Such an additional payment was
unintended and the variations made resolved this anomaly.183
[355] Second, it was contended that prior to the Act, the right of an employer to direct
employees to take annual leave during a close-down of the employer’s business was clearly
recognised and provided through federal and state legislation and pre-modern award terms. In
addition to the legislative changes introduced by the Work Choices Act (to which we have
already referred) it was submitted that state legislation, such as the Annual Holidays Act 1944
(NSW) at s.4A, provided for the right of an employer to implement a close-down of its
business, in whole or in part, and enabled an employer to direct an employee to take a period
of unpaid leave to cover the close-down period, when the employee had insufficient leave
accrued. It was submitted that these and other statutory arrangements applied to employees
generally and, as such, the safety net provided by modern awards should also now reflect this
position.184 It was also submitted that unless there was good reason to do otherwise, a uniform
approach should be adopted across all modern awards on the close-down provisions.
[356] For our part, we note that a number of the earlier provisions to which reference was
made by those supporting the Employer Group’s claim contained a range of limitations upon
an employer’s right to direct an employee to take annual leave. For example:
the Annual Holidays Act 1944 (NSW) specifies that an employer can only give an
employee notice of a close-down once annually; and
awards and agreements also set parameters around these provisions. For example
the Clerks’ (South Australia) Award and the Retail Industry (South Australia)
Award provided that there could be no more than two close-downs in any one year.
[357] Third, it was submitted that the variation is supported by the fact that many employers
close their operations, or part of them, over the Christmas/New Year period and/or at other
times of the year. The inclusion of close-down provisions in the relevant modern award would
ensure that an employer has the right to direct employees to take leave during a close-down.
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[358] Fourth, it was submitted that a close-down provision benefits both employees and
employers. A close-down enables employees to take periods of annual leave for rest and
recreation, particularly during holiday seasons where they can spend time with family and
friends. It enables employees to take leave without employers having to secure replacement
labour for the leave period.185 An annual close-down also benefits employers by providing a
mechanism through which employers may reduce leave liability and better manage staff
absences.186
[359] Fifth, it was submitted that many employers must observe different award provisions
for different employees, in addition to observing the NES provisions governing the taking of
leave during close-downs for award/agreement free employees.187
[360] This is said to make the safety net confusing, burdensome, unfair for employers, and
in some cases, unworkable where the employer has to deal with varying award provisions, or
in some cases no close-down provisions within the same enterprise.188
[361] Sixth, it was submitted that the results of the Employer Survey support the claim.
Questions 9–10A of the Employer Survey are directed at the close-down issue, as follows:
“9. Since 1 January 2010, has your organisation closed down all or part of its operations at
any time during the year to allow employees to take leave? Choose one of the following
answers.
Yes
No
Unsure
10. If so, on how many occasions since December 2009 has your organisation closed down
all or part of its operations?
1–2
3–4
5+”
[362] Some 1928 employers (46.5 per cent of all responses) stated that since 1 January 2010
their organisation closed down all or part of its operations during the year to allow employees
to take leave. As to the number of occasions since December 2009 the organisation had closed
down all or part of its operations, the responses were as follows:
Answer Count %
1–2 occasions 477 23.8
3–4 occasions 1237 61.8
5+ occasions 215 10.7
No answer 72 3.6
Note: Percentages shown do not total 100 due to rounding.
[363] We will deal with Question 10A from the Employer Survey shortly.
[364] Finally, it was submitted that the modern awards to be varied do not meet the modern
awards objective and that the variations proposed are necessary to achieve that objective.189
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Promoting the efficient and productive performance of work (s.134(1)(d))
[365] ACCI submitted that the model clause provides a mechanism whereby employers can
ensure that employees actually take their leave and that such an outcome is beneficial to both
employees and employers as it serves to:
(i) reduce the prospects of employee “burnout” and poor health;
(ii) assist in maintaining job safety and satisfaction; and
(iii) ultimately help to ensure a more balanced, rested and (accordingly) productive
workforce.190
The likely impact on business, including on productivity, employment costs and the
regulatory burden (s.134(1)(g))
[366] Allowing employers to close down their businesses on a periodic basis was said to
allow an employer to reduce its annual leave liability thereby reducing the regulatory burden
on employers.191
A simple easy to understand and sustainable modern award system (s.134(1)(g)
[367] ACCI submitted that the practice of closing down all or part of a business’ operation is
widespread and well known. It is not a new concept and, prior to the introduction of the Act,
historically there had been a relatively uniform approach to annual close-down provisions.
Allowing employers to close down their premises on a periodic basis advances the objectives
of s.134(1)(g).192
Employment growth and the sustainability, performance and competitiveness of the
national economy (s.134(1)(h))
[368] It was contended that the model clause will reduce the regulatory burden on businesses
and allow them to divert funds currently set aside for excessive leave accruals on profit
generating investments. Compelling employees to take leave is also directly supportive of a
major sector of the economy—tourism.193
[369] The ACTU and a number of individual unions opposed the Employer Group’s claim
and contended that the Commission cannot be satisfied that it is necessary to grant the claim
in order to ensure that modern awards are meeting the modern awards objective. For reasons
which will become apparent, it is not necessary to canvass these submissions in any detail.
[370] We are not persuaded to grant the Employer Group’s claim for three reasons.
[371] First, while we accept that a close-down provision may be included in modern awards,
it is clear from the terms of s.93(3) that an award provision requiring an employee to take paid
annual leave in such circumstances is only permitted “if the requirement is reasonable”. We
are not satisfied that the model term proposed is “reasonable” in the sense contemplated by
s.93(3).
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[372] The model term is very broadly expressed and is capable of being applied in a manner
not contemplated in the type of annual close-down provisions traditionally provided in
awards, in particular:
(i) there is no restriction on the number of times a close-down can occur in a
12 month period; and
(ii) there is no restriction on the duration of the close-down—it could be for a single
day, a week or a number of weeks.
[373] Further, given the breadth of the model term we are not persuaded that a four week
notice period is reasonable.
[374] Second, while we generally agree with the proposition that it is desirable that
provisions dealing with the taking of annual leave be uniform across modern awards, it seems
to us that close-down provisions are an exception to this general proposition and warrant
consideration on an award-by-award basis.
[375] Some 81 modern awards already contain close-down provisions and the nature of the
provisions varies considerably. In its 2008 Award Modernisation decision, the Award
Modernisation Full Bench considered a number of general issues and standard clauses in
respect of modern awards. In respect of close-down related annual leave arrangements, the
Full Bench said:
“[97] The provisions in awards and NAPSAs governing annual close-downs vary significantly.
It is preferable that we do not alter provisions which have been specifically developed for
particular industries. We have adopted the approach of attempting to identify an industry
standard in each case. This means there may be some variation in the close-down provisions.”
194
[376] We have reviewed the existing range of modern award provisions and the basis upon
which they were established in the Award Modernisation process and have considered the
case put forward to establish a common provision. We are not persuaded that it is appropriate
to adopt a common provision across the modern awards which are the subject of the Employer
Group’s claim. The circumstances in the industries covered by modern awards and the need
for such a provision vary considerably. Accordingly, claims to vary existing close-down
provisions or to insert such a provision are more appropriately made and determined on an
award-by-award basis.
[377] In this context we also note that the Employer Survey does not support the proposition
that there is a need for the variations proposed. The Employer Survey provided that if an
organisation answered “no” to Question 9 (i.e. since 1 January 2010 has the organisation
closed down all or part of its operations at any time during the year to allow employees to
take leave) then they were directed to Question 10A, which was in the following terms:
“10A. If you answered no to question 9, what was the reason for your organisation not closing
down?
There was no operational reason for our business to close down.
We were unable to close down because it was not permitted by our award or
agreement”
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[378] The responses to Question 10A were as follows:
Answer Count %
There was no operational reason for our business to close down 1642 87.3
We were unable to close down because it was not permitted by our award
or agreement
67 3.6
No answer 172 9.1
[379] It is notable that less than 4 per cent of those employers who answered this question
responded that the reason why they had not closed down all or part of their operations since
1 January 2010 was that it was not permitted by their award or agreement. This does not
suggest that the absence of a close-down provision in the 41 modern awards which do not
presently have such a provision is creating particular difficulties for employers.
[380] Third, in support of the Employer Group’s claim, Ai Group and ACCI pointed to the
desirability of employees taking leave and that the proposed model term would provide a
mechanism by which employers can reduce their leave liability. We have addressed these
issues in the context of our consideration of the Employer Group’s “excessive leave” claim.
[381] On the material before us, we are not satisfied that the variations proposed are
necessary to ensure that the modern awards sought to be varied meet the modern awards
objective. In short, the proponents of the claim have not established a merit case sufficient to
warrant the granting of the claim.
[382] We leave open the capacity for interested parties to seek a variation to a modern award
to either vary an existing close-down provision or to insert an appropriate provision. Such
applications should be made during the Award stage of the Review on an individual award
basis. Any proposed variation will need to be supported by cogent evidence of industry
circumstances requiring such a provision or variation.
[383] We do accept that there may be potential difficulties created by circumstances where
an enterprise has access to a modern award close-down provision for most of its employees
but other applicable modern awards do not contain such a provision. The application of
occupational awards may be particularly relevant in that context. It seems to us that such
issues may be addressed by the insertion of a majority clause195 in applicable occupational-
based awards. We invite any interested party to make such applications and they will be dealt
with as part of the Award stage of the Review.
4.4 Granting leave in advance
[384] The Employer Group sought to vary 48 modern awards to include a provision
allowing for the taking of annual leave in advance of an entitlement to such leave accruing.196
The proposed clause is in the following terms:
“Annual Leave in Advance
By agreement between an employer and employee, a period of paid annual leave may be
taken in advance of the entitlement accruing. However, if paid annual leave is taken in
advance and the employee’s employment terminates before the employee has accrued
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the entitlement the employer may make a corresponding deduction from any money due
to the employee on termination.” 197
[385] The ACTU and a number of individual unions opposed the Employer Group’s
claim.198
[386] We propose to deal with the relevant historical and legislative context before turning
to the merits of the claim.
[387] The issue of whether modern awards should contain provisions for granting leave in
advance was not expressly addressed during the Part 10A award modernisation process. When
dealing with the matter of annual leave generally, the Award Modernisation Full Bench
indicated that it was not possible to develop a single model clause due to the wide range of
provisions contained in pre-modern awards and NAPSAs.199 In considering the terms to
include in modern awards, the Full Bench decided upon an appropriate entitlement for a
particular modern award rather than attempting to preserve the many different entitlements
which previously applied. The approach taken was described as involving a “degree of
rationalisation at the award level only” and not the insertion of a standard annual leave
provision across all awards.200 We note that some 74 modern awards contain a clause
permitting the taking of annual leave in advance of the entitlement accruing.201
[388] The Joint Exhibit (referred to at paragraph [81] above) contained details of legislation,
both federal and state, which deals with annual leave entitlements and related matters. It
identified provisions which expressly deal with an employee taking annual leave in advance
of an entitlement to that leave accruing. It appears that federal legislation has not expressly
dealt with the issue but it has been dealt with in New South Wales, Queensland and Northern
Territory legislation.202 In this respect, we note that s.3(3) of the Annual Holidays Act 1944
(NSW) provides that, if an employee and employer agree, annual leave may be taken in
advance of the employee becoming entitled to the leave. Section 12 of the Industrial Relations
Act 1999 (Qld) and s.8 of the Annual Leave Act (NT) contain similar provisions.
[389] We have earlier noted that s.139(1)(h) of the Act allows a modern award to contain
provisions dealing with leave and “arrangements for taking leave”. Section 93(4) of the Act
which is also relevant to this matter, is in the following terms:
“Terms about taking paid annual leave
(4) A modern award or enterprise agreement may include terms otherwise dealing with
the taking of paid annual leave.”
[390] It is apparent from the Explanatory Memorandum to the Fair Work Bill 2008 that the
proposed clause is a term of the type envisaged by s.93(4). The Explanatory Memorandum
provides as follows:
“383. Subclause 93(4) enables an award or agreement to include other terms about the taking of
paid annual leave – e.g., the taking of paid annual leave in advance of accrual.”
[391] Section 94 of the Act deals with annual leave entitlements of award and agreement
free employees and a note contained in s.94(6) refers to a similar issue to the matter before us.
It provides:
81
“Agreements about taking paid annual leave
(6) An employer and an award/agreement free employee may agree on when and how
paid annual leave may be taken by the employee.
Note: Matters that could be agreed include, for example, the following:
(a) that paid annual leave may be taken in advance of accrual;
(b) that paid annual leave must be taken within a fixed period of time after it is accrued;
(c) the form of application for paid annual leave;
(d) that a specified period of notice must be given before taking paid annual leave.”
(emphasis added)
[392] Section 55(4) of the Act deals with ancillary and supplementary terms which may be
included in a modern award. It provides as follows:
“Ancillary and supplementary terms may be included
(4) A modern award or enterprise agreement may also include the following kinds of terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an
employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any
respect, when compared to the National Employment Standards.
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by
section 90, an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond
the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or
paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay
(which is the rate required by sections 90 and 99).
Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms
requiring an employee to give more notice of the taking of unpaid parental leave than is required by
section 74.”
[393] Sections 323 and 324 were identified by the Employer Group as being relevant to that
part of the proposed clause which provides an employer with the right to make a deduction of
monies at the time of termination of employment. Section 323 deals with the method and
frequency of payment. One requirement is that it provides that an employee must be paid, in
full, in relation to the performance of work. However the section also refers to an exception to
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this requirement as provided for in s.324. That section deals with deductions that can be made
to payments which an employer is obliged to make to an employee. It reads:
“324 Permitted deductions
(1) An employer may deduct an amount from an amount payable to an employee in
accordance with subsection 323(1) if:
(a) the deduction is authorised in writing by the employee and is principally for the
employee’s benefit; or
(b) the deduction is authorised by the employee in accordance with an enterprise
agreement; or
(c) the deduction is authorised by or under a modern award or an FWC order; or
(d) the deduction is authorised by or under a law of the Commonwealth, a State or a
Territory, or an order of a court.”
[394] Section 324(1)(c) was relied upon by the Employer Group in respect of that part of the
variation they sought which concerns the deduction of monies from an employee’s
termination payments.
[395] We now turn to the submissions advanced in respect of the Employer Group’s claim.
[396] It is convenient to refer to the evidence first. Those supporting the Employer Group’s
claim rely on the Employer Survey discussed earlier in this decision. Questions 15–17 of the
Employer Survey deal with the issue of leave in advance, as follows:203
“15. Since 1 January 2010, have any of your employees requested a period of annual leave
in advance (ie before they have sufficient accrued leave to cover the request)?
Yes
No
Unsure
16. If you answered ‘yes’ to Question 15, on what percentage of occasions have you
agreed to these requests?
None
1–10%
11–25%
26–50%
51–75%
75+%
All
Unsure
17. If, in the future, an employee was to request a period of annual leave in advance,
would you be willing to grant such leave?
Yes
83
Depends on the circumstances
No
Unsure”
[397] The responses to Question 15 are particularly relevant:
Answer Count %
Yes 2289 61.2
No 1360 36.3
Unsure 92 2.5
No answer 0 –
[398] Further, the responses to Question 16 indicated that the majority of requests to grant
leave in advance were agreed to by 42 per cent of the employers who answered that
question.204
Answer Count
None 206
1–10% 812
11–25% 153
26–50% 127
51–75% 128
75% 247
All occasions 576
No answer 17
[399] The Employer Group’s submissions relied on the terms of s.139(1)(h) in support of the
proposition that a modern award may contain a clause in the terms sought. They also relied on
s.55(4)(b) of the Act and submitted that the proposed clause can properly be characterised as a
clause which supplements the NES.
[400] The clause was described as having two components. The first makes it clear it will
only apply where there is agreement between the employer and employee for the taking of
annual leave in advance of it having accrued. The second component allows an employer to
make a deduction from monies payable to an employee upon termination of employment.
[401] Ai Group pointed to the fact that there are similar provisions in 74 modern awards and
that there was no evidence those provisions have operated in a way that is disadvantageous or
unfair to employees. They asserted that the absence of an express provision in a modern
award dealing with the granting of annual leave in advance, and the right to make a relevant
deduction from monies owing to an employee, discourages employers from granting such
leave. They acknowledged that s.324(1)(a) of the Act provides that an employer may deduct
an amount from an employee’s pay if “the deduction is authorised in writing by the
employee and is principally for the employee’s benefit” but submitted that is not an
adequate provision for an employer as such an authorisation can be withdrawn by the
employee at any time.205
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[402] Ai Group also submitted that the absence of a clause in many modern awards in
similar terms to that proposed operates against the interests of employees who may wish to
take annual leave in circumstances where an entitlement to do so has not accrued. They
provided examples of such circumstances:
where an employee needs to take annual leave for unexpected family reasons and
the employee does not have sufficient leave accrued; or
where the employer closes down its operations for a period and an employee
does not have sufficient annual leave accrued.206
[403] ACCI submitted that the proposed clause is principally focussed upon facilitating the
taking of employee entitlements at times that are most convenient to employees. It is
submitted that the self-evident reason why employees wish to take leave in advance is that
they wish to take leave at a particular time that suits them, however their leave accruals at the
relevant time do not permit the taking of the leave.207 In this regard ACCI relied on the
finding by Skinner and Pocock that a reason given by employees for not taking their full leave
entitlement was that they had their leave paid out when they changed jobs and hence had no
accrued entitlement.208 (see Table 4 at paragraph [142] above.)
[404] ACCI and Ai Group submitted that the proposed clause would be consistent with the
modern awards objective in s.134 of the Act. The submissions advanced in this regard may be
summarised as follows:
(i) The clause would promote social inclusion through increased workforce
participation as is referred to in s.134(1)(c).
(ii) The clause will promote flexible modern work practices and the efficient and
productive performance of work. The proposed variation increases the
likelihood of employees actually taking leave. In turn, the taking of leave
should ensure a more balanced, rested and productive workforce. This will help
to ensure the efficient and productive performance of work, advancing the
objective in s.134(1)(d).
(iii) The clause will not increase the regulatory burden on employers or increase
their employment costs. By ensuring more leave is taken, the proposed
variation is likely to result in fewer employees accruing excessive leave
balances. This is likely to reduce the regulatory burden and employment costs
associated with employment, advancing the objective in s.134(l)(f) of the Act.
(iv) The taking of leave in advance is already widespread. Fifty-five per cent of
employers have received requests since 1 January 2010 from employees
seeking to take annual leave in advance. Of these requests, the vast majority of
employers have acceded to them at some point in time. The implementation of
the proposed clause will, accordingly, ensure that modern awards provide a
framework for a practice that is already widespread, thus giving rise to a
simple, understandable and relevant modern award. This will advance the
objective in s.134(l)(g) of the Act.
85
(v) By providing employees with greater opportunities to take leave, Australian
tourism will be supported, thus contributing to the sustainability and
performance of the national economy, advancing the objective in
s.134(1)(h).209
[405] As we have mentioned, the ACTU and a number of individual unions opposed the
variations sought by the Employer Group. While acknowledging that the Act allows for such
a term to be inserted in modern awards in the form sought, the unions advanced a range of
reasons why the Employer Group’s claim should be rejected.
[406] The ACTU submitted that any benefit to the small minority of employees who seek to
take annual leave in advance is outweighed by the potential for the provision to be abused. It
was contended that employers could exert pressure on employees to take a period of annual
leave in advance and that the proposed clause would allow employers to “pre-emptively
reduce leave balances” and ensure that employees are “in debt to their employer in terms of
the annual leave they owe upon the termination of employment”.210 It was also contended that
employees will be forced to take their leave in advance or be threatened with termination of
employment. It was submitted that in these circumstances, the concept of “agreement” or
“consent” to the arrangement in this context is illusory.211
[407] The ACTU referred to the legislation which governed annual leave prior to modern
awards being made and the commencement of the Act and submitted that, generally,
employees were not entitled to take annual leave until a full year’s entitlement had accrued,
that is, until the anniversary of each year of employment. Now, under s.87(2) of the Act,
employees can take annual leave when and as it accrues. On this basis it was submitted that
the imperative for a provision granting leave in advance is greatly reduced.212
[408] We are satisfied that the proposed clause is one which can be included in a modern
award. We have earlier reproduced s.93(4), which deals with the taking of paid annual leave.
The proposed clause is a term envisaged by that section. We also accept that the proposed
clause can properly be described as a provision supplementary to the NES. In this respect,
nothing in the evidence or submissions has persuaded us that the effect of the clause would be
detrimental to an employee when compared with the NES, a consideration raised by s.55(4).
[409] The ACTU and individual unions challenged the contention that the proposed clause
would be beneficial to employees and submitted that the motivation for the proposed clause
was to enhance an employer’s opportunity to pressure an employee to take leave for reasons
beneficial to the employer. In particular, they submitted that employers will use the provision
to force employees to take annual leave at a time which suits an employer rather than at a time
which suits an employee. But these submissions amounted to little more than a series of
assertions without any evidentiary foundation. No evidence was led by the ACTU or any of
the individual unions to establish, or even suggest, that the existence of comparable clauses in
some 74213 modern awards had operated to the disadvantage of an employee. Nor was there
any evidence employers had misused such clauses in the manner suggested.
[410] The ACTU also submitted that we should place little weight on the submission that
employers had frequently been asked by their employees to take a period of annual leave in
advance of an entitlement to such leave accruing. Despite the limitations of the Employer
Survey, we accept that it does establish that such requests are commonplace.
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[411] We are persuaded an award term which facilitates agreements to take leave in advance
will be beneficial to employees. It will allow an employee to take paid annual leave, albeit
with the agreement of their employer, at a time when they may not otherwise be able to.
Further, there seems no good reason why the capacity to take leave in advance of accrual
should be available to award/agreement free employees and not to employees covered by a
modern award. The insertion of such a term into modern awards will align the entitlements of
modern award covered employees with those of award/agreement free employees.
[412] We have redrafted the proposed Employer Group clause to provide a model term
dealing with the provision of paid annual leave in advance of accruing an entitlement to such
leave. The model term is set out below:
“1 Annual leave in advance
1.1 An employer and employee may agree to the employee taking a period of paid annual
leave in advance of the employee accruing an entitlement to such leave provided that the
agreement meets the following requirements:
(a) it is in writing and signed by the employee and employer;
(b) it states the amount of leave to be taken in advance and the date on which the
leave is to commence; and
(c) it is retained as an employee record.
1.2 This subclause applies if an employee takes a period of paid annual leave in advance
pursuant to an agreement made in accordance with clause 1.1. If the employee’s employment
is terminated before they have accrued all of the entitlement to paid annual leave which they
have taken then the employer may deduct an amount equal to the difference between the
employee’s accrued annual leave entitlement and the leave taken in advance, from any monies
due to the employee on termination.”
[413] The main difference between the model term we have determined and the Employer
Group’s claim are the requirements regarding the content and form of any agreement to
provide leave in advance (subclause 1.1(a)) and the employer’s obligation to keep such
agreements as an employee record (subclause 1.1(c)). These requirements are consistent with
an employer’s existing obligations under Regulation 3.36 of the Fair Work Regulations
2009.214
[414] We are also persuaded that the model term will further the modern awards objective of
ensuring that modern awards, together with the NES, provide a fair and relevant minimum
safety net. The provision will allow employees to take annual leave at a time when they may
be faced with circumstances obliging them to take a period of leave. It will also allow them to
take leave at a time which aligns with their personal preference to do so. As such it is likely
that such a provision will encourage employees to take their annual leave. In these respects it
can be said to be consistent with ss.134(1)(a), (c) and (d) of the Act. By aligning the annual
leave entitlement of modern award covered employees with their award/agreement free
counterparts in an industry, and expressly providing for the right of an employer to make a
relevant deduction from termination pay, the model term is likely to make a modern award
simpler and easier to understand. At the same time, it will not impact negatively on business
costs nor an employer’s regulatory burden. These considerations are consistent with
ss.134(1)(f) and (g).
87
[415] The Employer Group’s claim is only directed at 48 modern awards. We are satisfied
that the variation of those modern awards to incorporate the model term is necessary to meet
the modern awards objective. Further, for the reasons given earlier (at paragraphs [156]–
[168]) greater consistency in the provisions governing the taking of annual leave will make
the modern award safety net simpler and easier to understand. Accordingly, our provisional
view is that it is necessary to vary all modern awards to insert the model term in order to
achieve the modern awards objective. Any interested party who wishes to advance a contrary
view will have an opportunity to do so, in response to the draft variation determinations
arising from this decision.
4.5 Payment of annual leave entitlements on termination
[416] The ACTU sought to vary 118 modern awards in relation to the payment of annual
leave entitlements on termination. The variations sought to insert a common term, as follows:
“Payment on termination
If, when the employment of an employee ends, the employee has a period of untaken annual
leave, the employer must pay the employee the amount that would have been payable to the
employee had the employee taken that period of leave.”215
[417] Depending on the circumstances in a particular modern award, the variation would
ensure that the payment for annual leave on termination of employment included annual leave
loading and other payments made to the employee if they had actually taken annual leave.
[418] It was contended that the variations proposed are necessary to remove inconsistency
with the NES, and s.90(2) in particular. In essence, the ACTU contended that the current
provisions in a number of modern awards are inconsistent with s.90(2) of the Act. Section 90
of the Act is as follows:
“90 Payment for annual leave
(1) If, in accordance with this Division, an employee takes a period of paid annual leave,
the employer must pay the employee at the employee’s base rate of pay for the employee’s
ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken
paid annual leave, the employer must pay the employee the amount that would have been
payable to the employee had the employee taken that period of leave.”
[419] The ACTU submitted that the effect of the variations proposed is simply to re-state the
obligation that arises under s.90(2) of the Act and that the proposed variations do not create a
fresh obligation that does not currently arise under the Act.
[420] Ai Group and a number of other employer bodies opposed the ACTU’s claim.
[421] For reasons which will become apparent, it is unnecessary to canvass the merit of the
ACTU’s claim or the arguments advanced in support and opposition.
[422] The merit of the ACTU’s claim turns on the proper construction of s.90(2).216 This
issue was the subject of a recent judgment of the Federal Court (Buchanan J) in Centennial
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Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union
(No.2).217 The central practical issue between the parties was whether payment for accrued
annual leave on termination of employment under the relevant enterprise agreement must
include payment of “annual leave loading” or alternatively, rostered overtime, shift and
weekend penalty payments, in circumstances where such payments must be made for a period
of annual leave actually taken during employment.
[423] In the proceedings before Buchanan J, the applicant argued that the entitlement to be
paid for accrued leave on termination was referable to the obligation arising under s.90(1),
that is the base rate of pay for ordinary hours which would have been worked during the
period of annual leave. The respondent argued that s.90(2) requires payment of the whole
amount which would actually have been payable during a period of leave, that is the amount
as calculated under clause 19.6 of the agreement. His Honour dealt with the competing
arguments at paragraphs 23–26 of his judgment and concluded in the following terms:
“Owing to the context (award or enterprise agreement or private agreement) and the statutory
language (“at least the full amount”) it does not appear that s 93 or s 94 refer back to any
minimum entitlement stated by s 90(1). What then of s 90(2), where the phrase at issue is:
the amount that would have been payable to the employee had the employee taken that
period of leave.
A construction to the effect that s 90(2) protects the whole entitlement to annual leave
certainly cannot be excluded. This appears to me to be a case where reference to extraneous
material would assist.
The Explanatory Memorandum to the FW Bill stated:
Clause 90 – Payment for annual leave
370. Subclause 90(1) entitles an employee to be paid at their base rate of pay (as
defined in clause 16) for the employee’s ordinary hours of work for the period of their
absence on leave.
(The meaning of ordinary hours of work and base rate of pay are outlined at the
beginning of this Part.)
371. This is a minimum entitlement and would not prevent an employer and
employee from agreeing to, or an award or enterprise agreement providing for, more
generous payment terms.
372. Subclause 90(2) provides that, on termination of employment, an employee is
entitled to receive a payment in respect of any untaken paid annual leave. The
payment will be equivalent to the amount that the employee would have been paid
if the employee had taken the annual leave. (emphasis added.)
In my view, this lends support to the argument that s 90(2) (unlike s 90(1)) is not confined to a
statement of a minimum obligation, but is a statement to the effect that an employee should
not suffer a reduction in the value of unpaid annual leave if employment comes to an end
while paid annual leave remains untaken.
I therefore reject the construction argued by the applicant. I am not prepared, in effect, to read
down s 90(2) in the face of the expectation stated in the Explanatory Memorandum when that
construction is plainly open on the terms of s 90(2) itself.
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That does not mean necessarily that this aspect of the application should be dismissed,
although that may be the result.
Section 55(1) prohibits an enterprise agreement from excluding any provision of the National
Employment Standards. Section 55(2) allows an enterprise agreement to include some
expressly permitted terms. Clause 19.5 is not such a term. Section 55(4), (5) and (6) permit
ancillary and supplementary terms and terms which have the same effect as provisions of the
National Employment Standards. Terms which give the same entitlement operate in parallel
with the National Employment Standards, which operate as minimum standards (s 55(6)).
The provisions of cl 19.5 purport to state an entitlement which is less than the entitlement I
have determined is granted by s 90(2), when read with cl 19.6. In my view, although there
may be some argument to the contrary (i.e. that there is no necessary inconsistency), cl 19.5
does operate on its face (“an employee is paid”) in a way which excludes the operation of
s 90(2). Clause 19.5, therefore, has no effect (s 56).”218
[424] On 19 March 2015 a Notice of Appeal was filed in respect of His Honour’s decision
alleging, in part, that His Honour erred in finding that s.90(2) of the Act is not confined to a
statement of minimum obligation and is a statement to the effect that an employee should not
suffer a reduction in the value of unpaid annual leave if employment comes to an end while
paid annual leave remains untaken. The appeal is yet to be determined.
[425] We also note that issues associated with the interaction of modern award terms and
s.90 were canvassed in the report of the Fair Work Act Review Panel.219 At section 5.27 of
the report the Review Panel stated:
“5.2.7 Annual leave loading on termination
A principal concern raised by stakeholders about annual leave provisions under the NES is the
payment of annual leave loading on termination, an issue that has received some public
attention recently and was raised in many submissions and meetings with the Panel. The
concern arises with the interpretation of s. 90(2), which provides:
(2) If, when the employment of an employee ends, the employee has a period of
untaken paid annual leave, the employer must pay the employee the amount that
would have been payable to the employee had the employee taken that period of leave.
The provision has been interpreted by the FWO, based on advice from Senior Counsel, as
requiring the payment of an annual leave loading entitlement, even where award or agreement
provisions specifically preclude payment of the loading. Stakeholders including the ACCI and
the Ai Group propose amendment to the legislation to clarify that leave loading is only
payable on termination if provided for in the relevant industrial instrument.
The provision of annual leave loading was originally to compensate employees for the
notional loss of overtime earnings while on leave, although the benefit then spread to most
sectors of the workforce, including areas not generally subject to overtime payments. A
common feature of award leave loading provisions historically was that leave loading was not
payable on termination. Advice tendered to the Senate’s Education, Employment and
Workplace Relations Committee by the FWO was that 112 modern awards include provision
for annual leave loading, 29 of which either explicitly or implicitly provide that the loading is
not payable on termination of employment, a further nine provide that it is payable and 74 are
silent on the issue.
90
While it is not clear beyond doubt whether s. 90(2) was intended to preserve existing
arrangements for the payment of leave loading on termination, the interpretation of the
provision by the FWO, in contradistinction to the interpretation by many employer
representatives, has meant that longstanding arrangements under awards and enterprise
agreements have been disturbed.
For employers who traditionally have not had to pay annual leave loading on termination, they
have incurred an additional cost in paying out the annual leave on termination. Leave loading
typically amounts to 17.5 per cent on the base rate of pay, depending on the relevant modern
award or enterprise agreement. It is impossible to quantify the cost of this change to the
economy overall, as there is no way to gauge how much leave is owed to employees whose
employment has been terminated, what their base rate of pay is, what the relevant leave
loading is, how many employees are covered by awards or agreements that provide leave
loading and whether all employers have been meeting the new requirement. It is, however,
noted that the interpretation of the requirement would have the most negative impact on
affected small businesses. The benefit to employees covered by instruments that previously
had not attracted leave loading on separation is that they are entitled to be paid leave loading
on top of leave owed to them when leaving their employment.
Backed with the weight of past practice and to provide certainty on the issue, the Panel
therefore recommends that s. 90(2) of legislation be amended to provide that leave loading is
only payable on separation where expressly provided under the relevant modern award or
enterprise agreement for both new and existing employees.
Recommendation 6: The Panel recommends that s. 90 be amended to provide that annual
leave loading is not payable on termination of employment unless a modern award or
enterprise agreement expressly provides to that effect.” (references omitted)
[426] The Fair Work Amendment Bill 2014 responded to a number of outstanding
recommendations from the Fair Work Review Panel’s June 2012 report, including the
recommendation relating to the payment of annual leave entitlements on termination. The bill
proposes to repeal section 90(2) and provide as follows, in substitution:
“(2) If, at the time (the termination time) when the employment of an employee ends, the
employee has a period of untaken paid annual leave:
(a) the employer must pay the employee a rate for each hour of the employee’s untaken
paid annual leave; and
(b) that rate must not be less than the rate that, immediately before the termination time, is
the employee’s base rate of pay (expressed as an hourly rate).
Note: See also section 55 (which deals with the interaction between the National
Employment Standards and a modern award or enterprise agreement).”
[427] The amendment was described in the Second Reading Speech for the bill as a change
to “restore the longstanding position, that employees are only entitled to annual leave loading
when their employment ends if it is expressly provided for in their award or workplace
agreement”.220 The bill is yet to be passed by the Senate.
[428] There is plainly a degree of uncertainty surrounding the statutory provision at the
centre of this issue. The proper construction of s.90(2) is to be considered by a Full Court of
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the Federal Court at some time (presumably) this year and the fate of the amendments
proposed in the bill is unknown.
[429] In these circumstances we propose to adjourn our consideration of the ACTU’s claim
at this stage. Any interested party may seek to have the matter called back on for further
programming and submissions.
4.6 Electronic funds transfer and paid annual leave
[430] The Employer Group sought to insert the following clause into 51 modern awards:
“Electronic Transfer Payment of Annual Leave
Despite anything else in this clause, an employee paid by electronic funds transfer (EFT) may
be paid in accordance with their usual pay cycle while on paid annual leave.”221
[431] The 51 awards sought to be varied (see Attachment I) currently contain a term which
requires the employer to pay an employee for annual leave prior to the employee taking the
leave. For example, clause 34.4(a) of the Food, Beverage and Tobacco Manufacturing Award
2010 provides:
“34.4 Payment for period of annual leave
(a) Instead of the base rate of pay as referred to in s.90(1) of the Act, an
employee under this award, before going on annual leave, must be paid the
wages they would have received in respect of the ordinary hours the employee
would have worked had the employee not been on leave during the relevant
period.” (emphasis added)
[432] The effect of the proposed variation is that where employees are paid by EFT they
may be paid their annual leave in accordance with their usual pay cycle, rather than being paid
prior to commencing their period of annual leave. The Employer Group’s claim did not seek
to change the status quo (i.e. payment for leave being made in advance of taking the leave) in
respect of employees who are paid by cash or cheque.
[433] The Employer Group contended that the proposed variations are necessary to ensure
that the 51 modern awards which are the subject of the claim meet the modern awards
objective by:
ensuring that modern awards provide a relevant minimum safety net; and
reducing the regulatory burden on employers.
[434] The union parties opposed the Employer Group’s claim.
[435] The ACTU submitted that the Employer Group had not made out a case for changing a
long standing award entitlement. While the ACTU conceded that cash payments are less
common than they used to be, it advanced the following submissions in support of its
contention that “there are sound reasons for ensuring that all employees receive payment for
annual leave in advance”:
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“a. Payment in advance is a long standing award entitlement. The regulatory burden and
administrative costs associated with the provisions are not new.
b. Annual leave accrues progressively throughout a year of service and at the time an
employee intends to take his or her annual leave it is an entitlement they have already earned
by providing service to their employer throughout the year. Annual leave is an entitlement
vested in an employee and it is unfair to deny an employee access to the payment that is due to
them.
c. There are significant leave-related costs that employees incur prior to and throughout
the period of leave. Employees would be significantly disadvantaged if the long-standing
award entitlement to payment in advance was removed.
d. The additional costs incurred by employers as a result of the requirement to pay
employees in advance are likely to be minimal as businesses can comply with the provision by
making payments in the ordinary pay cycle preceding the period of annual leave. Electronic
payment processes have also substantially reduced general administrative costs.
e. The applicant’s claim may produce inequitable outcomes for employees paid by EFT
vis a vis employees that receive cash payment in advance of taking the leave. It is also
possible that some employees will not receive cash payments to which they are entitled if the
award provision is altered to create two different sets of obligations.”222
[436] The existing award provisions which require annual leave to be paid prior to taking
leave do not appear to have been the subject of any detailed arbitral consideration. It is likely
that they simply reflect the position as it was in some pre-modernised awards and in state and
territory legislation.223 During the award modernisation process these provisions were then
simply translated into the existing 51 modern awards which are the subject of the Employer
Group’s claim, without any consideration of the merits of the provisions.
[437] Modern award terms requiring the payment of annual leave at or prior to the
commencement of leave relate back to a time when employees were predominantly paid by
either cash or cheque, usually with an associated requirement to attend the workplace to
receive payment. In such circumstances a requirement for the payment of annual leave at the
commencement of the leave makes sense—it avoids the need for the employee to attend work
(during their annual leave) simply for the purpose of collecting their pay. But the question is
whether such a provision is still relevant in contemporary circumstances.
[438] Questions 18–21 of the Employer Survey are directed at this claim. Question 18
provided as follows:
“18. Do you pay any of your permanent employees by cash or cheque (or some other non-
electronic transfer method) on a regular basis?”224
[439] Some 3166 employers (about 85 per cent of all responses) answered no to this
question (528 answered yes and 19 were unsure). Hence a substantial majority of respondents
pay their employees by EFT. It is also apparent from the responses to Question 20 that a
significant number of survey respondents said that they were charged extra fees for processing
payroll outside their usual pay period—as may be the case if leave was paid at the
commencement of the leave as opposed to during the usual pay cycle.225
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[440] Changes in consumer behaviour are also relevant. ACCI tendered the May 2014 ‘HP-
RFI Australian Payments Research Report’.226 The report indicates that only 35 per cent of
consumer transactions are now undertaken in cash, with the remainder being by a variety of
methods including credit cards, charge cards, BPAY, store gift cards and other transactions.
By dollar value, credit card transactions represent a far greater proportion of consumer
expenditure (27 per cent) than cash transactions (16 per cent).
[441] The data in the report show a trend away from cash-based transactions and towards
either credit card usage or direct transfer and BPAY methods.
[442] The variety of payment methods available and the data as to usage suggest that
employees are now more likely to rely on payments made in advance of taking leave (i.e.
BPAY and direct transfers) or credit card usage during annual leave in order to meet leave
related expenses. Cash payments during the course of leave are unlikely to be the main source
of payment used for leave related expenses.
[443] We are persuaded that the Employer Group’s claim should be granted.
[444] The variation of modern awards to incorporate the model term will ensure that each
modern award provides a fair and relevant minimum safety net. In so deciding we have taken
into account the s.134 considerations, insofar as they are relevant, and we are satisfied that
such a variation is necessary to achieve the modern awards objective.
[445] The variation of the relevant modern awards will ensure that each of these modern
awards provides a “fair and relevant minimum safety net”. The variations will ensure that
these modern awards are “relevant” to the needs of the modern workplace.
[446] We are also satisfied that the model term reflects flexible modern work practices and,
accordingly, the insertion of such a term in modern awards will promote such practices,
consistent with s.134(1)(d).
[447] Section 134(1)(f) is also relevant in that the variations will reduce employment costs
and the regulatory burden on business.
[448] As to the arguments advanced by the ACTU, while we accept that the variations
proposed will remove an existing employee entitlement, we are not persuaded that employees
will be “significantly disadvantaged” by such an outcome. The suggestion seems to be that
employees require payment in advance in order to meet “significant leave-related costs that
employees incur prior to ... the period of leave”.227 Contrary to the ACTU’s assertion we think
it is more likely that employees either save money over time to pay for a holiday or use credit.
The lump-sum payment immediately prior to the commencement of leave is unlikely to assist
as employees will continue to incur their usual living expenses (e.g. rent, mortgage, other
interest payments, utilities etc.) during their period of leave. Paid annual leave provides a
respite from work, but does not generally provide any additional income (unless a leave
loading is payable).
[449] The ACTU also submitted that removing the existing entitlement would disadvantage
employees in two further respects:
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an employee who travels overseas or to a remote domestic location may have
difficulty contacting their employer to resolve any problems with their pay; and
an employer may become insolvent while the employee is on leave.
[450] Neither of these arguments is particularly persuasive. Given modern communications
and the extent of internet connectivity the first issue is unlikely to be a common problem. As
to the second point, insolvency can arise at any time and result in employee disadvantage, for
example between pay cycles. There are statutory and administrative mechanisms for
employees to recover the payments owed to them in such circumstances.
[451] For completeness, we note that during the course of the ACTU’s oral submissions it
argued that s.90 required annual leave to be paid in advance.228 If this is the argument put, we
do not think it correct.
[452] There is no legislative requirement that the payment for annual leave be made prior to
taking the leave. Section 90(1) of the Act provides:
“90 Payment for annual leave
(1) If, in accordance with this Division, an employee takes a period of paid annual leave,
the employer must pay the employee at the employee’s base rate of pay for the employee’s
ordinary hours of work in the period.”
[453] By the use of the word if at its commencement s.90(1) identifies a condition or
contingency upon the satisfaction or occurrence of which a specified requirement applies. The
condition or contingency is that “an employee takes a period of paid annual leave” and the
requirement is that “the employer must pay the employee’s base rate of pay for the
employee’s ordinary hours of work in the period”. It follows that the requirement to make
payment in respect of paid annual leave arises when the employee actually takes the annual
leave.229
[454] Section 323 of the Act deals with the method and frequency of payment of certain
employment entitlements:
“323 Method and frequency of payment
(1) An employer must pay an employee amounts payable to the employee in relation to
the performance of work:
(a) in full (except as provided by section 324); and
(b) in money by one, or a combination, of the methods referred to in subsection (2);
and
(c) at least monthly.
Note 1: This subsection is a civil remedy provision (see Part 4–1).
Note 2: Amounts referred to in this subsection include the following if they become payable during a
relevant period:
(a) incentive-based payments and bonuses;
(b) loadings;
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(c) monetary allowances;
(d) overtime or penalty rates;
(e) leave payments.
(2) The methods are as follows:
(a) cash;
(b) cheque, money order, postal order or similar order, payable to the employee;
(c) the use of an electronic funds transfer system to credit an account held by the
employee;
(d) a method authorised under a modern award or an enterprise agreement.
(3) Despite paragraph (1)(b), if a modern award or an enterprise agreement specifies a
particular method by which the money must be paid, then the employer must pay the money
by that method.
Note: This subsection is a civil remedy provision (see Part 4–1).”
[455] In Re Canavan Building Pty Ltd Enterprise Agreement 2013230 a Full Bench
considered the interaction between s.90(1) and s.323:
“Section 90(1) therefore confirms that the statutory scheme is founded on there being a temporal
connection between the taking of annual leave and the payment for such leave. Section
323(1)(c), which deals with the frequency of payment for amounts payable to employees in
relation to the performance of work - including, as the accompanying statutory note indicates,
leave payments - further confirms this, in that such payments must be made “at least monthly”.
In relation to annual leave, this provision only makes sense if read as a requirement for
employers to pay for annual leave within the pay cycle that the leave is taken, such pay cycle
being at least monthly in frequency. Paragraph 1283 of the Explanatory Memorandum for the
Fair Work Bill supports s.323(1)(c) together with the statutory note being read in this way
(underlining added):
‘The legislative note after this subclause makes clear that the payment rule covers a
wide range of payments, where they fall due during the relevant payment period -
including incentive-based payments and bonuses, loadings, monetary allowances,
overtime or penalty rates and leave payments.’”
[456] Finally, we are satisfied that a variation of the type proposed is an ancillary or
incidental term within the meaning of s.55(4) of the Act. The statutory notes to s.55(4)
provide examples of terms that are “ancillary”, “incidental” or “supplementary”. Note 1 is
relevant in the present context:
“Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
...
(b) that specify when payment under section 90 for paid annual leave must be
made.”
[457] The variations proposed are of the type contemplated by s.55(4)(a) and the effect of
such a variation is not detrimental to an employee, in any respect, when compared to the NES.
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5. Purchased Leave
[458] As we have mentioned, Ai Group initially advanced a claim in respect of “purchased
leave”. It was proposed that a model term be inserted into all modern awards, in the following
terms:
“X.4 Purchased leave
By agreement between an employer and an employee, a “purchased leave” arrangement may
be implemented under which the employee chooses to forgo an amount payable to the
employee in relation to the performance of work but receives a corresponding additional
amount of annual leave.”231
[459] The model term would allow, by agreement, additional annual leave each year in
exchange for a corresponding reduction in salary. Ai Group later decided not to pursue its
“purchased leave” proposal during these Common issue proceedings, but reserved its right to
pursue the matter in one or more individual Group 3 or Group 4 awards.232
[460] It seems to us that a provision of the type proposed by Ai Group can be properly
characterised as an ancillary or incidental term within the meaning of s.55(4)(a). It is a term of
the type contemplated in Note 1 to s.55(4), which states:
“Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90,
an employee may take twice as much leave at half that rate of pay; ...”
[461] The material before us suggests that there is a level of interest in providing
arrangements which facilitate the “purchase” of additional annual leave. Skinner and Pocock
explored this issue, to some extent. One of their survey questions asked respondents to choose
between more paid leave and a pay rise: “Bearing in mind that two weeks is about 4% of a
full year. If you had a choice between a 4% pay rise or an additional two weeks of paid leave
each year, which one would you prefer to have?”233 These questions replicated a 2002
survey.234 Table 6 compares the 2002 and 2010 results.
Table 6: Full-time employees’ preference for a pay rise or additional two weeks’
paid leave by gender, age and parenting status—AWALI 2010 and TAI 2002
AWALI 2010 TAI 2002
4% pay rise 2 weeks’ paid leave 4% 2 weeks
Men
(%)
Women
(%)
All
(%)
Men
(%)
Women
(%)
All
(%)
All
(%)
All
(%)
All 43.4 43.5 43.4 56.6 56.5 56.6 44.7 51.6
Age
18–24 years 51.4 44.4 49.0 48.6 55.6 51.0 - -
25–34 years 45.5 47.8 46.2 54.5 52.2 53.8 39.7 57.2
35–49 years 38.5 40.0 38.9 61.5 60.0 61.1 47.1 48.6
50–59 years 43.5 45.0 44.1 56.5 55.0 55.9 48.9 47.6
60+ years 57.1 44.0* 52.1 42.9 56.0* 47.9 - -
Parenting responsibility
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Children 18 years 40.1 42.3 40.7 59.9 57.7 59.3 47.8 47.9
No Children 18 years 46.8 44.0 45.6 53.2 56.0 54.4 42.5 54.1
Household composition
Single parent ** 42.1 41.5 ** 57.9 58.5 - -
Couple with children 38.3 39.6 38.7 61.7 60.4 61.3 - -
Couple without children 48.7 46.0 47.5 51.3 54.0 52.5 - -
Single without children 44.9 41.0 43.6 55.1 59.0 56.4 - -
Household income
$30 000–$59 999 53.1 42.3 48.8 46.9 57.7 51.2 53.7 43.7
$60 000+ 41.5 43.7 42.2 58.5 56.3 57.8 41.1 56.2
Notes: *Estimate unreliable due to insufficient sample size; **Estimate not provided due to inadequate sample size.
TAI data only included those aged 25–59 years. TAI data not available for gendersocio-demographic categories. Insufficient sample size for
household income$30,000.
[462] In 2002, 51.6 per cent of respondents said that they would prefer a two week holiday
to an equivalent pay rise of 4 per cent.235 In 2010, the preference for paid leave over money
was slightly more pronounced, with 56.6 per cent of respondents saying that they would
choose more paid leave over a pay rise.
[463] In a logistic regression analysis with work hours, employment contract and occupation
as predictors, whether or not workers had taken their full leave entitlement in the previous
year was associated with different preferences for more time than more money. Skinner and
Pocock provide the following commentary on these matters:
“Whether or not workers had taken their full leave entitlement in the previous year was also
associated with different preferences for more time or money. Those who had taken their full
leave entitlement in 2009 were more likely to prefer an additional two weeks’ leave (62.1%)
compared to those who had not taken their full leave entitlement (53.6%) (x²(1)=10.61, p.01).
Those who had not taken all their paid leave were more likely to prefer a pay rise (46.4%,
compared to 37.9% of those who had taken all their leave). In a logistic regression controlling
for occupation, those who had taken all their leave (Yes =1) were more likely to prefer
additional leave (OR =1.41, CI 1.13–1.75, p=.002). Indeed, considering all the employment
predictors (hours, contract, occupation), workers’ leave-taking behaviour (took all leave or
not) in the past year was the only statistically significant predictor of preferences for more time
or money...
... It is not surprising that those who use up all their paid leave are more likely to want more,
while those who do not are more likely to choose a pay rise over additional leave. However, it
is interesting to note that when asked to choose, more than half (53.6%) of those who do not
use all their leave would like more of it over more money; these represent a group of
‘unholidayed holiday-preferers’. A seeming contradiction between deferring paid leave and
yet preferring more might be explained by the fact that most workers (83.5%) can carry over
their leave and take it later: the ‘unholidayed holiday-preferers’ appear to value accumulating
a bank of leave over having more money in their hand.” 236
[464] An ACTU claim for “purchased leave” was considered in the Family Provisions Case
2003–05.237 Ai Group advanced its own purchased leave claim and also agreed with some
elements of the ACTU’s claim, but disputed other aspects. Ultimately the AIRC rejected both
claims, largely on the ground of complexity:
“[218] It seems to us that this claim while having some acceptable aspects, also has some
negatives. The ACTU has not made out its case for a right to an additional six weeks of unpaid
98
leave. Even though the purpose of the leave is to be confined, it would be an unwarranted
imposition on employers. Furthermore the process to be followed in the event of disagreement
as to the timing of the leave is unnecessarily cumbersome and time-consuming. In addition, the
purchase element of the claim is too complex. Like the AiG proposal we deal with later, the
provision is unnecessarily detailed and has the potential to create confusion over a relatively
simple matter. Averaging over a longer period of pay foregone during a period of unpaid leave
could assist employees with their budgeting and can be done in ways which are unlikely to
disadvantage employers greatly if at all. In this area a significant amount could be achieved by
agreement without the need for award variation.”238
[465] The AIRC later observed that “a simpler approach is needed”239 and urged the parties
to enter into further discussions with a view to developing such an approach. It appears that
subsequent discussions were unsuccessful and the issue was then overtaken by legislative
events.
[466] It seems to us that a facilitative provision dealing with purchased leave is worthy of
further consideration. It appears that the Act may permit such a provision to be inserted in
modern awards and, on the face of it, such a provision may meet the objective of “assisting
employees to balance their work and family responsibilities by providing for flexible working
arrangements” (s.3(d)). Depending on the form of such a provision, consideration may need to
be given as to whether a purchased leave arrangement constitutes a “permitted deduction”
within the meaning of s.324. We propose to publish a discussion paper on the issue of
purchased leave shortly.
6. Next Steps
[467] The outcomes of this decision will be applied in accordance with the following steps.
[468] Where a claim has been granted in part or in full, the Commission will prepare draft
determinations varying each of the affected awards for comment. As outlined in the statement
issued on 7 April 2014:
“[4] It is proposed that once the Annual Leave Common Issue proceedings are
completed, the Full Bench will issue an in principle decision, along with any draft
determinations for all modern awards. Interested parties will then have the opportunity
to comment upon the draft determinations as they relate to each individual modern
award, and make submissions related to tailoring any provisions to specific awards ...
[5] ... [T]his phase will be used for tailoring clauses to suit particular awards and
should not be viewed as an opportunity to re-agitate issues already determined by the
Annual Leave Full Bench.” 240
6.1 Excessive annual leave
[469] As outlined in paragraph [219], the model term set out in paragraph [189] only reflects
our provisional view. Interested parties will be provided with an opportunity to make further
submissions directed at both the model term and the proposition that all modern awards be
varied to insert the model term. Directions will be issued in relation to the filing of further
submissions and a final oral hearing. Submissions filed in accordance with those directions
99
should also address the modern awards objective. We will only reach a concluded view in
respect of these issues after considering all of the further submissions.
6.2 Cashing out of annual leave
[470] A standard clause will be inserted into all modern awards in the form outlined at
paragraph [255]. Draft determinations will be prepared and published on the Commission’s
website for comment.
6.3 Close-down
[471] This claim was rejected. Parties who wish to pursue a claim to insert or vary close-
down provisions should do so on an award-by-award basis through the Award stage of the
Review.
6.4 Granting leave in advance
[472] A standard clause will be inserted into the 48 modern awards which were the subject
of this claim, as detailed at Attachment H, in the form set out at paragraph [384]. Draft
determinations will be prepared and published on the Commission’s website for comment.
Further, for the reasons given at paragraph [415], draft determinations will be prepared and
published on the Commission’s website in respect of the remaining 74 modern awards which
already contain similar provisions. Interested parties will have an opportunity to comment on
the draft determination.
6.5 Payment of annual leave entitlements on termination
[473] For the reasons given at paragraphs [428]-[429] we have adjourned our consideration
of this claim. Any interested party may seek to have the matter called back on for further
programming and submissions.
6.6 Electronic funds transfer and paid annual leave
[474] A standard clause will be inserted into each modern award listed in Attachment I in
the form outlined at paragraph [430]. Draft determinations will be prepared and published on
the Commission’s website for comment.
6.7 Purchased leave
[475] Interested parties are asked to consider whether a provision for purchased leave should
be included in modern awards. Submissions should be made in accordance with the directions
to be issued and focus on what a purchased leave provision would contain and whether such a
provision should be inserted into all modern awards.
6.8 Enterprise awards
[476] Since these applications were made, a number of modern awards applying to only one
enterprise have been made. Parties to those enterprise awards may make submissions in
100
accordance with the directions issued to outline their views as to how this decision should
apply to each modern enterprise award.
PRESIDENT
Printed by authority of the Commonwealth Government Printer
Price code O, PR567520
Appearances:
T Clarke, J Dolan and R Carter for the Australian Council of Trade Unions.
S Maxwell and G Nabor for the Construction, Forestry, Mining and Energy Union.
S Smith, B Ferguson and R Bhatt for The Australian Industry Group.
L Izzo, D Grozier and A Matheson for the Australian Chamber of Commerce and Industry.
L Izzo for the New South Wales Business Chamber and Australian Business Industrial.
L Izzo and R Calver for Master Builders Australia Limited.
S Crawford for The Australian Workers’ Union.
J Sweetman and T Evans for the Australian Hotels Association.
W Chesterman for the Victorian Automobile Chamber of Commerce and Motor Trades
Associations.
S Elliffe for the National Retail Association.
K McCosh for the National Electrical Contractors Association.
J Moriarty and M Nguyen for the “Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union” known as the Australian Manufacturing Workers’ Union
(AMWU).
L Weber for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries
Union” known as the Australian Manufacturing Workers’ Union (AMWU)—Vehicle
Division.
D De Martino for the Shop, Distributive and Allied Employees Association.
101
V Wiles for the Textile, Clothing and Footwear Union of Australia.
L Svendsen for the Health Services Union of Australia.
J Nucifora and J Knight for the Australian Municipal, Administrative, Clerical and Services
Union.
M Adler for the Housing Industry Association.
G Parkes for the Accommodation Association of Australia, Restaurant & Catering Australia
and the Motor Inn, Motel and Accommodation Association.
T Angelopoulos for the Horticulture Taskforce.
B Hodgson for the Fair Work Ombudsman.
P Eberhard for The Master Plumbers’ and Mechanical Services Association of Australia.
G Johnston for the Australian Meat Industry Council.
C McElroy for Local Government New South Wales and the State and Territory Local
Government Associations.
S Forster for the Australian Federation of Employers and Industries.
J Shingles and E Larkin for the Australian Childcare Alliance and Australian Childcare
Centres Association.
M Burns and W McNally for The Maritime Union of Australia.
J O'Dwyer for Master Electricians Australia.
G Liggins for the Aged and Community Services Association.
M Roddam and A Breen for the Minister for Employment on behalf of the Commonwealth.
K Mark for the Pharmacy Guild of Australia.
S McKinnon and R Martin for the National Farmers’ Federation.
I McDonald for the Australian Public Transport Industrial Association.
M Diamond for the Building Services Contractors Association of Australia.
D Harris for the South Australian Chamber of Commerce and Industry trading as Business
SA.
Hearing details:
2014.
102
Sydney, Melbourne, Adelaide, Brisbane and Canberra (video hearing
August 20, 21.
October 16.
December 1.
1 This decision also deals with unpaid annual leave in the context of close-down.
2 [2014] FWCFB 916.
3 [2014] FWC 1790 at paras 5–6.
4 [2013] FWC 10195, [2014] FWC 1790.
5 [2014] FWC 2279 at para 2.
6 Ai Group submission, 20 March 2014 at para 2.19.
7 ACCI correspondence, 21 May 2014.
8 [2014] FWCFB 1788.
9 Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35] per
Tracey J.
10 Friends of Hichinbrook Society Inc v Minister for Environment (No 3) (1997) 77 FCR 153; Australian Competition and
Consumer Commission v Leelee Pty Ltd [1999] FCA 1121; Edwards v Giudice [1999] FCA 1836.
11 [2014] FWCFB 1788 at para 60.
12 [2015] FWCFB 620 at para 8.
13 Preliminary Jurisdictional Issues [2014] FWCFB 1788 at para 24.
14 Preliminary Jurisdictional Issues [2014] FWCFB 1788 at paras 35–36.
15 Fair Work Commission Background paper—Annual leave common issue, 30 May 2014.
16 [2008] AIRCFB 1000 at para 99.
17 [2013] FWCFB 6266.
18 [2012] FWAFB 5600.
19 [2012] FWAFB 5600 at para 99.
20 Also see Modern Awards Review 2012 - Award Flexibility [2013] FWCFB 2170 at para 10–12.
21 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment A.
22 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, paras 14-15.
23 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment C.
24 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, para 19.
25 ACCI Small Business Survey, August 2014.
26 ACTU submissions in reply, 1 August 2014, paras 42–55; AMWU outline of submission in reply, 1 August 2014 at para 3.
27 Transcript at para 1181.
28 Transcript at para 1041; The ABS defines a stratified random sample as a sample that first identifies relevant subgroups
from within the population and random samples are selected from within each strata. ABS Statistical Language - Census
and Sample, July 2013, http://www.abs.gov.au/websitedbs/a3121120.nsf/home/statistical+language+-
+census+and+sample, accessed 12 September 2014.
29 Transcript at para 1041.
30 ACCI’s correspondence and outline of submissions, 20 June 2014 at para 5.3.
31 Transcript at paras 1048–1059.
http://www.abs.gov.au/websitedbs/a3121120.nsf/home/statistical+language+-+census+and+sample
http://www.abs.gov.au/websitedbs/a3121120.nsf/home/statistical+language+-+census+and+sample
https://www.fwc.gov.au/decisionssigned/html/2013FWCFB2170.htm
http://www.airc.gov.au/awardmod/databases/general/decisions/2008aircfb1000.htm
https://www.fwc.gov.au/decisionssigned/html/2014FWCFB1788.htm
https://www.fwc.gov.au/decisionssigned/html/2014FWCFB1788.htm
https://www.fwc.gov.au/decisionssigned/html/2015FWCFB620.htm
https://www.fwc.gov.au/decisionssigned/html/2014FWCFB1788.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2014FWCFB1788.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2014fwc2279.htm
https://www.fwc.gov.au/decisionssigned/html/2014FWC1790.htm
https://www.fwc.gov.au/decisionssigned/html/2013FWC10195.htm
103
32 Master Builders Australia submission and witness statement, 20 June 2014, Witness statement of Geoffrey Charles Thomas
at p. 3.
33 See for example, Transcript at paras 1129–1131, 1152 and 1223–1225.
34 See for example, Transcript at paras 1176 and 1281.
35 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014.
36 See Exhibits A, D, E, G and H to ACCI correspondence and outline of submissions, 20 June 2014.
37 Denniss R (2003) Annual Leave in Australia: An Analysis of Entitlements Usage and Preferences. The Australia Institute
Discussion Paper No. 56 Canberra: The Australia Institute.
38 Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-entering the Australian workforce’,
The Australia Institute, Institute Paper No. 13, November 2013, pp. 26–27.
39 ACCI outline of submissions, 20 June 2014 at para 7.14.
40 ACCI outline of submissions, 20 June 2014 at para 7.22.
41 ACCI outline of submissions, 20 June 2014 at para 7.24.
42 ACCI outline of submissions, 20 June 2014 at paras 7.26–7.28.
43 ACCI outline of submissions, 20 June 2014 at paras 7.29–7.30.
44 Ai Group submission and witness statements, 20 June 2014, p. 12 at para 34.
45 Ai Group submission and witness statements, 20 June 2014, p. 18 at para 47.
46 ACTU reply submission, 1 August 2014, pp. 25–26 at paras 109 and 111.
47 ACTU reply submission, 1 August 2014, p. 23 at para 93.
48 ACTU reply submission, 1 August 2014, p. 27 at para 120.
49 ACTU reply submission, 1 August 2014, p. 26 at para 113.
50 Transcript at paras 1877–1889.
51 ACTU reply submission, 1 August 2014, p. 20 at paras 81–82 and pp. 29–30 at paras 132–133.
52 ACTU reply submission, 1 August 2014, pp. 28–29 at paras 125–128.
53 Transcript at paras 1877–1881.
54 ACTU reply submission, 1 August 2014, p. 29 at paras 129–131.
55 Transcript at para 1886.
56 See generally ACCI further submission, 28 October 2014, Affidavit of Julian Fredrick Arndt: 218 such applications were
made in the period 30 August 1998 to 4 November 2010.
57 Also see Fair Work Act 1994 (SA): Schedule 4; Industrial Relations Act 1984 (Tas): s.47AE(5)–(7); Annual Leave Act
1973 (ACT): s.10; Annual Leave Act (NT): s.6(9).
58 When the Work Choices Act was introduced the Commonwealth Government suggested that the resulting system would
cover 85 per cent of all Australian employees: see Work Choices: A New Workplace Relations System, Australian
Government, Canberra 2005 p.11, citing unpublished ABS data. Attempts since the Work Choices Act to estimate the
respective coverage of federal and state laws have produced conflicting results. Research conducted for the Queensland
Government suggested that the new federal system would cover 76 per cent of employees: Queensland Government, ‘The
Coverage and Characteristics of the State Jurisdiction under a New Industrial Relations System’, Submission to
Queensland Industrial Relations Inquiry into the Impact of Work Choices on Queensland Workplaces, Employees and
Employers, Appendix 1, Queensland Government, Brisbane, 2006. A subsequent analysis published by the ABS found
that the federal system covered at least 79 per cent of all Australian employees, compared with 12 per cent in the state
systems and 9 per cent being uncertain: ABS (2008) ‘Jurisdictional Coverage of Pay-Setting Arrangements’, Australian
Labour Market Statistics 2008, ABS Cat 6105.0. See generally Peetz D ‘How Wide is the Impact of Work Choices?’ in
Abbott K et al (eds) Work Choices: Evolution or Revolution, Heidelberg Press, pp.23–41.
59 See Stewart A ‘Testing the Boundaries: Towards a National System of Labour Regulation’ in Forsyth A and Stewart A
(eds) ‘Fairwork: The New Workplace Laws and the Work Choices Legacy’, Federation Press, 2009, pp.19–39, p.24.
60 Explanatory Memorandum to the Fair Work Bill 2008 at para 383.
61 [2008] AIRCFB 1000.
62 Re General Retail Industry Award 2010 [2010] FWAFB 305 at para 1.
63 Re General Retail Industry Award 2010 [2010] FWAFB 305 at para 30.
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb305.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb305.htm
104
64 Re General Retail Industry Award 2010 [2010] FWAFB 305 at para 30.
65 Re Fast Food Industry Award 2010 [2010] FWAFB 379 at para 1.
66 Re Fast Food Industry Award 2010 [2010] FWAFB 379 at para 28.
67 Re Fast Food Industry Award 2010 [2010] FWAFB 379 at para 28.
68 Fair Work Commission Background paper—Annual leave common issue, 30 May 2014, Attachment C at p.33. Note the
figure of 82 modern awards in this paper includes 3 awards that provide that an employer can direct an employee to take
leave but this is not restricted to excessive leave.
69 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55, p.82. at p. 685.
70 Denniss R (2003) Annual Leave in Australia: An Analysis of Entitlements Usage and Preferences. The Australia Institute
Discussion Paper No. 56 Canberra: The Australia Institute.
71 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55, p.82. at p.686.
72 Wooden M and Warren D (2008) Paid annual leave and working hours: Evidence from the HILDA survey, Journal of
Industrial Relations 50(4); Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-
entering the Australian workforce’, The Australia Institute, Institute Paper No. 13, November 2013, pp. 26–27; and
Tourism Australia (2012).
73 Wooden M and Warren D (2008) Paid annual leave and working hours: Evidence from the HILDA survey, Journal of
Industrial Relations 50(4) at p. 666.
74 Wooden M and Warren D (2008) Paid annual leave and working hours: Evidence from the HILDA survey, Journal of
Industrial Relations 50(4) at p. 666.
75 Wooden M and Warren D (2008) Paid annual leave and working hours: Evidence from the HILDA survey, Journal of
Industrial Relations 50(4) at p. 666.
76 Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-entering the Australian workforce’,
The Australia Institute, Institute Paper No. 13, November 2013, pp. 26–27.
77 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment E at p. 25.
78 Joudrey A and Wallace J (2009) Leisure as a coping resource: A test of the job demand-control-support model. Human
Relations 62(2): 195–217; Walsh R (2011) Lifestyle and mental health. American Psychologist, advance online
publication, 17 January at p. 682.
79 Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-entering the Australian workforce’,
The Australia Institute, Institute Paper No. 13, November 2013 at p. 27.
80 Cairncross G and Waller I (2004) ‘Not taking Annual Leave: What Could it Cost Australia’, Journal of Economic and
Social Policy, Vol: 9, Issue 1, Article 3.
81 Safe Work Australia ‘Guide for Managing the Risk of Fatigue at Work’, November 2013 at p. 2.
82 Safe Work Australia ‘Guide for Managing the Risk of Fatigue at Work’, November 2013 at p. 9.
83 ACCI, Expert accounting report of Mr Eugene Kalenjuk, 2 July 2014 at p. 4.
84 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment E at p. 27.
85 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p. 682.
86 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p.694.
87 ACCI outline of submissions, 20 June 2014 at para 7.14.
88 [1915] AR 235 at [237]–[238].
89 [1915] AR 235 at [237]–[238].
90 (1936) 36 CAR 738.
91 (1936) 36 CAR 738 at [747].
92 Eden D (2001), ‘Vacations and other respites: Studying stress on and off the job’, in Robertson I (eds) International
Review of Industrial and Organisational Psychology, Vol 16, New York, John Wiley & Sons pp 121-146, cited in
Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p.682
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb379.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb379.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb379.htm
https://www.fwc.gov.au/documents/decisionssigned/html/2010fwafb305.htm
105
93 Cited in Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for
work-life balance, Journal of Industrial Relations, 21 August 2013, Vol. 55, p.82. at pp. 682–683
94 Westman & Etzion (2001) at pp. 595, 602–603, cited in Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia:
Who gets it, who takes it and implications for work-life balance, Journal of Industrial Relations, 21 August 2013, Vol. 55,
at p.682
95 Etzion, D. 2003, ‘Annual vacation: duration of relief from job stressors and burnout.’ Anxiety, Stress and Coping, 16(2),
at pp. 223–224.
96 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at pp. 688–689
97 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p.689
98 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p. 689.
99 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at p. 695.
100 Ai Group correspondence, 21 May 2014, Attachment A at p. 1; varied by Ai Group correspondence, 15 October 2014,
Attachment A at p. 1.
101 See also Attachment F; figure amended from 83 in the 30 May 2014 Background Paper.
102 Sometimes described as ‘18 months of annual leave accrued’: Cemetery Industry Award 2010 at clause 24.3.
103 Nurses Award 2010, cl.31.2; Security Services Industry Award 2010, cl.24.3; Asphalt Industry Award 2010, cl.25.5;
Broadcasting and Recorded Entertainment Award 2010, cl.23.6; Cement and Lime Award 2010, cl. 24.5; Gardening and
Landscaping Services Award 2010, cl. 24.4; Gas Industry Award 2010, cl.25.4; Horse and Greyhound Training
Award 2010, cl. 23.4; Premixed Concrete Award 2010, cl. 24.5; Quarrying Award 2010, cl.29.5; Racing Clubs Events
Award 2010, cl.30.4; Racing Industry Ground Maintenance Award 2010, cl.24.3; Silviculture Award 2010, cl.29.4;
Sporting Organisations Award 2010, cl.25.4; Textile, Clothing, Footwear and Associated Industries Award 2010, cl.41.4;
Black Coal Mining Industry Award 2010, cl.25.4; Air Pilots Award 2010, cl.27.4; Architects Award 2010, cl.20.2;
Ambulance and Patient Transport Industry Award 2010, cl.30.8; Mobile Crane Hiring Award 2010, cl.25.2; Ports,
Harbours and Enclosed Water Vessels Award 2010, cl.22.4; Aquaculture Industry Award 2010, cl. 23.4.
104 The Nurses Award 2010 (cl.31.2) provides that ‘Annual leave will be given and taken within six months of the employee
becoming entitled to annual leave of more than five weeks’; Also see the Black Coal Mining Industry Award 2010,
cl.25.4 (‘unless otherwise agreed, annual leave will be taken within 12 months of the date the employee received the
annual leave entitlement’); Air Pilots Award 2010, cl.27.4 (‘Normally, annual leave will be granted and will be taken
within 12 months from the date on which it falls due or alternatively 15 months from the date of commencement of the
preceding period of leave’); Architects Award 2010, cl.20.2 (‘The employee must be allowed to take annual leave at a
time agreed with the employer, within four months after it is due’); Ambulance and Patient Transport Industry
Award 2010, cl.30.8 (‘Annual leave will be taken within six months of the employee becoming entitled to take it unless
alternative arrangements are agreed between the employer and employee’); Mobile Crane Hiring Award 2010, cl. 25.2
(‘Leave will be given and will be taken within six months from the date when the right to annual leave occurred and after
not less than four weeks notice to the employees’); Ports, Harbours and Enclosed Water Vessels Award 2010, cl.22.4
(‘Annual leave must be taken within six months of the entitlement accruing’).
105 Higher Education Industry—General Staff—Award 2010, cl.30.1(a) and Higher Education Industry—Academic Staff—
Award 2010, cl.23.1 (‘at least two months prior to the date on which the employee is to take the leave’); Also note that
the Ports, Harbours and Enclosed Water Vessels Award 2010, cl. 22.4 provides that ‘An employer may require an
employee to take a period of annual leave provided the employee is given at least 14 days’ notice’.
106 Section 127 provides that the Regulations may permit modern awards to include terms that would or might otherwise be
contrary to Part 2-2 or s.55, or prohibit modern awards from including terms that would or might otherwise be permitted
by Part 2-2 or s.55. No such regulations have been made.
107 Ai Group submission and witness statements, 20 June 2014 at paras 17–18 and 20–21.
108 Ai Group submission and witness statements, 20 June 2014 at para 33.
109 [2015] FWCFB 3124 at para 25.
110 [2015] FWCFB 3124 at paras 25–28.
111 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014.
112 Re Just Cuts (Canberra and Queanbeyan) Agreement 2000-2003, Print T3829, 30 November 2000 at para 16.
106
113 Review of Wage Fixing Principles – October 1993 (1993) 50 IR 285 at [320]; Enterprise Flexibility Test Case
(1995) 59 IR 430 at [457].
114 [2008] AIRCFB 1000 at paras 99–100.
115 [2009] AIRCFB 50 at paras 3–4 and 8–9.
116 [2009] AIRCFB 345 at para 4.
117 For example see Re Journalists Published Media Award 2010 (2009) 187 IR 192 at [116]; Re Commercial Sales Award
2010 [2009] AIRCFB 826 at [276]; Re Meat Industry Award 2010 [2009] AIRCFB 942 at [11].
118 Seafood Processing Award 2010 at clause 27.8.
119 Seafood Processors and Exporters Council and others Parties’ Draft awards—Seafood Processing Industry Award, 6
April 2009.
120 [2010] FWAFB 9985.
121 [2010] FWAFB 9985.
122 CFMEU v Fair Work Australia and Newlands Coal Pty Ltd [2011] FCA 719 at [83].
123 Enterprise bargaining commenced in October 1991 through the ‘Prices and Incomes Accord Mark VII’ however note the
principle of enterprise bargaining was federally legislated in 1993 via the Industrial Relations Reform Act 1993 (Cth).
124 ACCI submission, 27 November 2014; ACTU submission, 27 November 2014; TCFUA submission, 27 November 2014;
Ai Group submission, 27 November 2014; BHP Billiton correspondence and submission, 27 November 2014; Housing
Industry Association correspondence, 27 November 2014.
125 AE406974.
126 For example clause 33.4 the Downer EDI Engineering Electrical Pty Ltd (Tasmania) Greenfield Agreement 2013
[AE406442].
127 For example clause 9.15.6 of the Diver Consolidated Industries (DCI) Enterprise Agreement 2013 [AE407170] which
provides for cashing out of annual leave only once an employee has been with the employer for 10 years or more.
128 For example clause 20.3 of The Westin Melbourne Enterprise Agreement 2012 [AE407158].
129 [2013] FWCFB 1635 at para 229.
130 Transcript at paras 1506 and 1522.
131 Transcript at paras 1527 and 1532.
132 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh, Attachment E at p. 15.
133 Ai Group submission and witness statements, 20 June 2014, Witness statement of Ms Kristina Flynn at para 21.
134 ACCI outline of submissions, 20 June 2014, Witness statement of Ms Fiona Corbett at para 7.
135 [2014] FWCFB 3500 at paras 392 and 400.
136 ACTU submission, 27 November 2014 at para 35.
137 [2014] FWCFB 3500 at para 72.
138 ACCI outline of submissions, 20 June 2014 at paras 6.24–6.26; Ai Group submission and witness statements, 20 June
2014 at para 126.
139 Pepsi Seven-Up Bottlers Perth Pty Ltd v FCT (1995) 62 FCR 289 at [298]–[299] per Hill J.
140 Fair Work Act 2009, s.134(f).
141 [2012] FWAFB 7858 at paras 38–45.
142 [2013] FWCFB 4000 at para 140.
143 ACCI outline of submissions, 20 June 2014 at para 6.9.
144 Mitchell R and Fetter J (2003) ‘The individualisation of employment relationships and the adoption of high performance
work practices: Final Report’, University of Melbourne at p. 9.
145 Mitchell R and Fetter J (2003) ‘The individualisation of employment relationships and the adoption of high performance
work practices: Final Report’, University of Melbourne at p. 9.
146 Mitchell R and Fetter J (2003) ‘The individualisation of employment relationships and the adoption of high performance
work practices: Final Report’, University of Melbourne at pp. 6–8.
147 ABS, Employee Earnings and Hours, Australia, May 2014, unpublished survey instrument, glossary.
148 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No, 6306.0, glossary.
107
149 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No, 6306.0, glossary.
150 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No, 6306.0, glossary.
151 ABS, Employee Earnings and Hours, Australia, May 2014, Catalogue No, 6306.0, glossary. Data on owner managers of
incorporated enterprises were not available and hence excluded from the analysis such that proportions calculated reflect
the total of collective agreements, individual arrangements and ‘award only’ arrangements.
152 It is noted that s.23 of the FW Act defines a small business (national system employer) as an employer that employs fewer
than 15 employees.
153 The chart in the background paper set out the 2012 data (which was the most recent data at the time the background paper
was released). The May 2014 data shows the same pattern as the 2012 data.
154 BHP Billiton’s submission, 27 November 2014 at paras 8–9.
155 ACTU submission in reply, 1 August 2014, p. 11 at paras 37–39.
156 ACTU submission in reply, 1 August 2014 at paras 270 and 272.
157 AMWU outline of submissions in reply, 1 August 2014, p. 6 at para. 4.3.
158 AMWU outline of submissions in reply, 1 August 2014, p. 7 at para 4.3.5.
159 Transcript at para 1196.
160 Transcript at para 1236.
161 ACTU submission in reply, 1 August 2014, pp. 58 and 60 at paras 288, 297 and 298.
162 ACTU submission in reply, 1 August 2014, p. 61 at para 299.
163 [2008] AIRCFB 1000 at paras 99–100.
164 [2009] AIRCFB 942.
165 Transcript at para 1190; ACTU submission in reply, 1 August 2014. p. 56 at para 269.
166 [2009] AIRCFB 942 at para 11.
167 Construction, Forestry, Mining and Energy Union v Fair Work Australia and Newlands Coal Pty Ltd [2011] FCA 719 at
[83].
168 Transcript at paras 1418–1420.
169 ACTU submission in reply, 1 August 2014, p. 5 at para 15.
170 ACTU submission in reply, 1 August 2014, pp. 54–55 at para 261.
171 Transcript at para 860.
172 ACCI correspondence, 21 May 2014.
173 Transcript at para 2539.
174 The Ai Group claim notes that there are 44 modern awards that do not presently contain any provision allowing employers
to implement an annual close down. It seems to us that there are 41 modern awards that do not presently contain the
provision. See Attachment G for explanation of discrepancies.
175 Transcript at paras 2139–2140.
176 Re Metal Industry Award 1971 (1977) 191 CAR 598.
177 [2008] AIRCFB 1000 at para 97.
178 [2008] AIRCFB 1000 at para 97.
179 [2009] AIRCFB 945 at para 27.
180 Pest Control Award [AN150106] at clause 15(k).
181 Fair Work Commission Background paper—Annual leave common issue, 30 May 2014, Attachment C at p.33.
182 [2014] FWCFB 255. See Ai Group submission and witness statements, 20 June 2014, p. 50 at para 50.
183 Ai Group submission 20 March 2014, p. 4 at para 2.10; Ai Group submission and witness statements, 20 June 2014, p. 20
at para 51.
184 Ai Group submission and witness statements, 20 June 2014, pp. 24–26 at paras 71–74.
185 Ai Group submission and witness statements, 20 June 2014, p. 20 at para 52.
186 Ai Group submission and witness statements, 20 June 2014, p. 20 at para 53.
187 Ai Group submission and witness statements, 20 June 2014, p. 21–23 at paras 58, 61 and 66–70.
108
188 Ai Group submission and witness statements, 20 June 2014, p. 21 at para 60.
189 See generally Ai Group submission 20 June 2014 at paragraph 76.
190 ACCI outline of submissions, 20 June 2014 at paras 8.5–8.7.
191 ACCI outline of submissions, 20 June 2014 at paras 8.8–8.11.
192 ACCI outline of submissions, 20 June 2014 at paras 8.12–8.17.
193 ACCI outline of submissions, 20 June 2014 at paras 8.18–8.20.
194 [2008] AIRCFB 1000 at para 97.
195 For an example of a majority clause, see Print M5600 at pp. 31–34.
196 Ai Group correspondence, 21 May 2014, p. 11 at Schedule 6.
197Ai Group further submission, 19 September 2014, p. 4 at para 6; ACCI correspondence, 19 September 2014 at p. 2.
198 The TCFUA addressed this variation in some detail and the AMWU and CFMEU did so in brief submissions.
199 [2008] AIRCFB 717 at para 30; [2008] AIRCFB 1000 at para 95.
200 [2008] AIRCFB 1000 at para 95.
201 Fair Work Commission Background paper—Annual leave common issue, 30 May 2014, Attachment C. (Note the
Background paper identified two additional awards as containing limited provision allowing for taking annual leave in
advance of accrual - see Attachment H).
202 Joint document filed by Ai Group, ACCI and ACTU, Legislative provisions relating to annual leave, 14 November 2014
(Attachment I); ACCI outline of submissions, 20 June 2014, p. 20 at para 9.4 refers to sections from this legislation.
203 ACCI outline of submissions, 20 June 2014, Annexure F; Ai Group submission and witness statements, 20 June 2014,
Witness statement of Mr Ben Waugh, Attachments A–G.
204 Of the 2249 employers who answered Question 16, 951 (42 per cent) said that they agreed to such requests on 51 per cent
or more occasions.
205 Ai Group submission and witness statements, 20 June 2014, p. 28 at para 81.
206 Ai Group submission and witness statements, 20 June 2014, p. 28 at para 82.
207 ACCI outline of submissions, 20 June 2014, p.20 at paras 9.5, 9.9 and 9.10.
208 Transcript at paragraphs 2176-2177.
209 Ai Group submission and witness statements, 20 June 2014, p. 28 at paras 81–84; ACCI outline of submissions, 20 June
2014, p. 21–22 at paras 9.12–9.19.
210 ACTU reply submissions, 1 August 2014, p. 46 at para 216.
211 TCFUA submission, 4 August 2014, p. 21 at para 7.10.
212 ACTU reply submission, 1 August 2014, p. 49 at para 231.
213 The Commission’s background paper of 30 May 2014 noted this as 76.
214 Transcript at paras 2185–2186.
215 ACTU correspondence, 21 May 2014; ACTU submission, 20 June 2014.
216 A point acknowledged by the ACTU, Transcript at paragraphs 86 and 281-282.
217 [2015] FCA 136.
218 [2015] FCA 136 at [31]-[38].
219 ‘Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation’ (2012) at pp. 99–100
220 Commonwealth, Parliamentary Debates, House of Representatives, Fair Work Amendment Bill 2014—Second Reading
Speech (the Hon. Christopher Pyne), 27 February 2014, p. 1086.
221 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014.
222 ACTU reply submission, 1 August 2014, pp. 69–70 at para 345.
223 See for example s.3(6)(b) of the Annual Holidays Act 1944 (NSW); s.8 of the Annual Leave Act 1973 (ACT); s.9 of the
Annual Leave Act (NT); s.13 of the Industrial Relations Act 1999 (Qld); s.235 of the Workplace Relations Act 1996 (Cth);
clause 7.1.3 of the Metal, Engineering and Associated Industries Award 1998; clause 37.12 of the Timber and Allied
Industries Award 1999; clause 7.1.2(a) of the Graphic Arts—General—Award 2000; clause 27(k)(i) of the Vehicle Industry—
Repair, Services and Retail—Award 2002.
224 Ai Group submission and witness statements, 20 June 2014, Witness statement of Mr Ben Waugh at Attachment A.
225 Question 20 asked: ‘Are you charged extra fees for processing payroll outside the usual pay period?’ 563 employees
answered ‘yes’, 1940 answered ‘no’ and 662 were ‘unsure’; Ai Group submission, 20 June 2014, Witness statement of
Mr Ben Waugh, Attachment E.
http://ris.dpmc.gov.au/files/2012/08/03-Final-Fair-Work-PIR-for-publication-20120802.pdf
109
226 ACCI outline of submissions, 20 June 2014 at Exhibit F.
227 ACTU reply submission, 1 August 2014, p. 69 at para 345.
228 Transcript at paras 1898–1922.
229 [2014] FWCFB 3202 at para 43.
230 [2014] FWCFB 3202 at para 44.
231 Ai Group submission, 20 March 2014.
232 Ai Group correspondence, 21 May 2014.
233 Skinner N and Pocock B (2013), ‘Paid annual leave in Australia: Who gets it, who takes it and implications for work-life
interference’, Journal of Industrial Relations 55(5), pp.681–698 and p. 685.
234 See Denniss R (2003) Annual Leave in Australia: An Analysis of Entitlements Usage and Preferences. The Australia
Institute Discussion Paper No. 56 Canberra: The Australia Institute.
235 Denniss R (2003) Annual Leave in Australia: An Analysis of Entitlements Usage and Preferences. The Australia Institute
Discussion Paper No. 56 Canberra: The Australia Institute.
236 Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it and implications for work-life
balance, Journal of Industrial Relations, 21 August 2013, Vol. 55 at pp. 690–691.
237 PR082005.
238 PR082005 at para 218.
239 PR082005 at para 400.
240 [2014] FWC 2279.
http://www.airc.gov.au/awardmod/databases/general/decisions/2014fwcfb2279.htm
110
List of references
Bent, S. 1998, ‘The psychological effects of extended working hours’, in The Twelve Hour
Workday: emerging issues, K. Heiler, (ed), Australian Centre for Industrial Relations
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Bureau of Tourism Research, 2004, ‘Datacard’, accessed February 2004.
Cairncross G and Waller I (2004) ‘Not taking Annual Leave: What Could it Cost Australia’,
Journal of Economic and Social Policy, Vol: 9, Issue 1, Article 3.
Cameron P and Denniss R (2013), ‘Hard to get a break? Hours, leave and barriers to re-
entering the Australian workforce’, The Australia Institute, Institute Paper No. 13, November
2013, pp. 26–27.
Commonwealth, Parliamentary Debates, House of Representatives, Fair Work Amendment
Bill 2014—Second reading Speech (the Hon. Christopher Pyne), 27 February 2014, p. 1085.
Denniss R (2003) Annual Leave in Australia: An Analysis of Entitlements Usage and
Preferences. The Australia Institute Discussion Paper No. 56 Canberra: The Australia
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Eaker ED, Pinsky J and Castelli WP (1992) Myocardial infarction and coronary death among
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Eden D (2001), ‘Vacations and other respites: Studying stress on and off the job’, in
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Etzion, D (2003) ‘Annual vacation: duration of relief from job stressors and burnout.’
Anxiety, Stress and Coping, 16(2), pp. 213–226.
Fair Work Act Review Panel (2012) Towards more productive and equitable workplaces: An
evaluation of the Fair Work legislation’, Report prepared by the Fair Work Act Review Panel,
August 2012, DEEWR.
Guide for Managing the Risk of Fatigue at Work, November 2013, Safe Work Australia.
Gump B and Matthews K (2000) Are vacations good for your health? The 9-year mortality
experience after the multiple risk factor intervention trial. Psychosomatic Medicine 62(5):
608–612.
Joudrey A and Wallace J (2009) Leisure as a coping resource: A test of the job demand-
control-support model. Human Relations 62(2): 195–217; Walsh R (2011) Lifestyle and
mental health. American Psychologist, advance online publication, 17 January.
Mitchell R and Fetter J (2003) ‘The individualisation of employment relationships and the
adoption of high performance work practices: Final Report’, University of Melbourne.
‘No leave, No life’ Tourism Australia campaign material
[http://www.tourism.australia.com/campaigns/no-leave-no-life.aspx].
http://www.tourism.australia.com/campaigns/no-leave-no-life.aspx
http://ris.dpmc.gov.au/files/2012/08/03-Final-Fair-Work-PIR-for-publication-20120802.pdf
http://ris.dpmc.gov.au/files/2012/08/03-Final-Fair-Work-PIR-for-publication-20120802.pdf
http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/43a669e8-9d2f-411b-bacb-ffc094fd0f4a/0017/hansard_frag.pdf;fileType=application%2Fpdf
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Skinner, N and Pocock, B (2013) Paid Annual Leave in Australia: Who gets it, who takes it
and implications for work-life balance, Journal of Industrial Relations, 21 August 2013, Vol.
55, pp. 681-698.
Trenberth L and Dewe P (2002) The importance of leisure as a means of coping with work
related stress: An exploratory study. Counselling Psychology Quarterly 15(1): 59–72.
Van Hooff M, Geurts S, Kompier M, and Taris T (2007) Workdays, in-between workdays and
the weekend: A diary study on effort and recovery. International Archives of Occupational
and Environmental Health 80(7): 599–613.
Wooden M and Warren D (2008) Paid annual leave and working hours: Evidence from the
HILDA survey, Journal of Industrial Relations 50(4).
112
Attachment A—Employer Group Parties
In addition to ACCI and the Ai Group, the joint employer parties supporting the proposed
variations include:
• Accommodation Association of Australia
• Aged and Community Services
• Australian Business Industrial and the NSW Business Chamber
• Australian Child Care Association
• Australian Childcare Centres Association
• Australian Federation of Employers and Industries
• Australian Hotels Association
• Australian Meat Industry Council
• Australian Mines and Metals Association
• Australian Public Transport Industrial Association
• Chamber of Commerce and Industry Queensland
• Chamber of Commerce and Industry, Western Australia
• Clubs Australia Industrial
• Hair and Beauty Industry Association
• Horticulture Taskforce
• Leading Age Services Australia
• Live Performance Australia
• Local Government Association of Northern Territory
• Local Government Association of Queensland
• Local Government Association of South Australia
• Local Government Association of Tasmania
• Local Government New South Wales
• Municipal Association of Victoria
• National Farmers’ Federation
• National Retailers Association
• Printing Industries Association of Australia
• Pharmacy Guild of Australia, The
• Queensland Hospitality Association
• Restaurant & Catering Australia
• Victorian Employer’s Chamber of Commerce and Industry
• Victorian Automobile Chamber of Commerce
• Western Australian Local Government Association
113
Attachment B—Index of Material
BACKGROUND PAPERS/RESEARCH MATERIAL
Background paper—Cashing out of annual leave 21 November 2014
Background paper—Annual leave common issue 30 May 2014
Background paper—Scope of annual leave common issue 25 March 2014
Analysis of bargaining by business size 20 August 2014
STATEMENTS
[2014] FWCFB 6891 1 October 2014
[2014] FWCFB 5362 7 August 2014
[2014] FWC 2279 7 April 2014
REPORTS
The individualisation of employment relationships and the adoption
of high performance work practices—final report (filed by the
Australian Council of Trade Unions)
21 October 2014
Report to Full Bench of Conciliation 15 August 2014
PWC expert accounting report (joint document of the Australian
Chamber of Commerce and Industry and the Australian Industry
Group—see also Mr Eugene Kalenjuk witness evidence)
2 July 2014
114
SUBMISSIONS AND CORRESPONDENCE
Accommodation Association of
Australia
Correspondence 19 June 2014
Submission 20 March 2014
“Automotive, Food, Metals,
Engineering, Printing and
Kindred Industries Union” known
as the Australian Manufacturing
Workers’ Union (AMWU)
Outline of submissions in reply 1 August 2014
“Automotive, Food, Metals,
Engineering, Printing and
Kindred Industries Union” known
as the Australian Manufacturing
Workers’ Union (AMWU)—
Vehicle Division
Submissions in reply 1 August 2014
The Association for Payroll
Specialists
Correspondence 29 July 2014
The Australasian Railway
Association
Submission 1 August 2014
Australian Chamber of
Commerce and Industry
Correspondence 2 March 2015
Further submission 19 December 2014
Submission 27 November 2014
Legislative provisions relating to
annual leave (joint document)
14 November 2014
Small business statistics (joint
document)
12 November 2014
Submission 28 October 2014
Correspondence 15 October 2014
Submission 19 September 2014
Correspondence 19 September 2014
Correspondence 5 August 2014
Submissions in reply 1 August 2014
Correspondence and outline of
submissions
20 June 2014
Correspondence 21 May 2014
Correspondence 11 April 2014
Submission 19 March 2014
Australian Childcare Centres
Association and Australian
Childcare Alliance
Submission 20 June 2014
115
Australian Council of Trade
Unions
Submission 27 November 2014
Legislative provisions relating to
annual leave (joint document)
14 November 2014
Small business statistics (joint
document)
12 November 2014
Correspondence 9 October 2014
Correspondence 6 October 2014
Submission 19 September 2014
Correspondence 6 August 2014
Submissions in reply 1 August 2014
Correspondence 23 July 2014
Submission 20 June 2014
Correspondence 21 May 2014
Correspondence 11 April 2014
Submission 20 March 2014
Australian Government
(Department of Employment)
Response 19 September 2014
Correspondence 21 August 2014
Australian Hotels Association Submission 20 March 2014
Australian Industry Group Submission 27 November 2014
Legislative provisions relating to
annual leave (joint document)
14 November 2014
Small business statistics (joint
document)
12 November 2014
Submission 28 October 2014
Correspondence 15 October 2014
Correspondence and chart
detailing accumulation of annual
leave
14 October 2014
Submission in reply 7 October 2014
Submission 19 September 2014
Reply submission 1 August 2014
Submission 20 June 2014
Correspondence 21 May 2014
Submission 20 March 2014
Australian Meat Industry Council Submission 20 March 2014
116
Australian Mines and Metals
Association Inc.
Outline of submissions 20 June 2014
Australian Public Transport
Industrial Association
Submission in reply 1 August 2014
Correspondence 29 May 2014
BHP Billiton Correspondence and submission 27 November 2014
Construction, Forestry, Mining
and Energy Union—Construction
and General Division
Correspondence 7 August 2014
Submission in reply 1 August 2014
Construction, Forestry, Mining
and Energy Union—Forestry and
Furnishing Products Division
Submission 20 June 2014
Correspondence 21 May 2014
Clubs Australia Industrial Submission 19 June 2014
Correspondence 2 June 2014
Coal Mining Industry Employer
Group
Submission 9 July 2014
Communications, Electrical and
Plumbing Union
Correspondence 17 October 2014
Horticulture Taskforce Outline of submissions 1 August 2014
Correspondence 23 June 2014
Housing Industry Association
Limited
Correspondence 27 November 2014
Submission 20 June 2014
Correspondence 26 May 2014
Correspondence 20 March 2014
Australian Entertainment Industry
Association t/as Live
Performance Australia
Submission 27 November 2014
Local Government Associations Submission 20 March 2014
Master Builders Australia
Limited
Submission 20 June 2014
Correspondence 23 May 2014
Correspondence 11 April 2014
Master Electricians Australia Correspondence 20 October 2014
Correspondence 27 May 2014
Maritime Union of Australia, The Submissions 20 June 2014
Media, Entertainment and Arts
Alliance
Correspondence 21 November 2014
117
National Farmers’ Federation Correspondence 9 October 2014
Submissions in reply 1 August 2014
Outline of submissions 20 June 2014
Queensland Funeral Directors’
Association Ltd and Funeral
Directors Association of New
South Wales Ltd
Submissions 20 March 2014
Pharmacy Guild of Australia Submissions 20 March 2014
Restaurant & Catering Australia Submission in reply 1 August 2014
Correspondence 20 June 2014
Submission 20 March 2014
Shop, Distributive and Allied
Employees’ Association
Correspondence and
deactivation guidelines
1 December 2014
Textile Clothing and Footwear
Union of Australia
Submission 27 November 2014
Submission 1 August 2014
LIST OF AUTHORITIES
Australian Industry Group List of authorities and materials 22 August 2014
Australian Council of Trade
Unions
List of authorities 20 August 2014
118
Attachment C—Witness Statements
NAME FILED BY DATE
Mr Stuart Lamont Accommodation Association of Australia 19 June 2014
Ms Nicki Passanisi Accommodation Association of Australia 5 June 2014
Ms Joyce Lawson Accommodation Association of Australia 7 August 2014
Ms Joyce Lawson Accommodation Association of Australia 14 August 2014
Ms Fiona Corbett Australian Chamber of Commerce and Industry 20 June 2014
Mr Julian Frederick
Arndt
Australian Chamber of Commerce and Industry 28 October 2014
Mr Ben Waugh Australian Industry Group 20 June 2014
Ms Kristina Flynn Australian Industry Group 18 June 2014
Mr Eugene Kalenjuk
(see also PWC expert
accounting report)
Australian Chamber of Commerce and Industry
and the Australian Industry Group
2 July 2014
Mr Warren Butler "Automotive, Food, Metals, Engineering,
Printing and Kindred Industries Union" known
as the Australian Manufacturing Workers'
Union (AMWU)—Vehicle Division
1 August 2014
Mr Warren Butler "Automotive, Food, Metals, Engineering,
Printing and Kindred Industries Union" known
as the Australian Manufacturing Workers'
Union (AMWU)—Vehicle Division
18 August 2014
Ms Melissa Adler Housing Industry Association Limited 19 June 2014
Ms Melissa Adler Housing Industry Association Limited 6 August 2014
Mr Geoffrey Charles
Thomas
Master Builders Australia Limited 18 June 2014
Mr David Murrie Restaurant & Catering Australia 18 June 2014
Mr Antonio D’Arienzo Restaurant & Catering Australia 5 June 2014
119
Attachment D—New Subclause for Excessive Annual Leave
The awards the Employer Group proposes to be varied to include the new subclause relating
to excessive annual leave (Employer Group propose insertion of new provision (Schedule 2))1
Award title
Aged Care Award 2010
Amusement, Events and Recreation Award 2010
Animal Care and Veterinary Services Award 2010
Book Industry Award 2010
Building and Construction General On-site Award 2010
Cleaning Services Award 2010
Corrections and Detention (Private Sector) Award 2010
Cotton Ginning Award 2010
Dredging Industry Award 2010
Dry Cleaning and Laundry Industry Award 2010
Educational Services (Post-Secondary Education) Award 2010
Fast Food Industry Award 2010
Fire Fighting Industry Award 2010
Fitness Industry Award 2010
Funeral Industry Award 2010
Hair and Beauty Industry Award 2010
Health Professionals and Support Services Award 2010
Hydrocarbons Field Geologists Award 2010
Labour Market Assistance Industry Award 2010
Live Performance Award 2010
Mannequins and Models Award 2010
Maritime Offshore Oil and Gas Award 2010
Market and Social Research Award 2010
Meat Industry Award 2010
Medical Practitioners Award 2010
Miscellaneous Award 2010
Pharmacy Industry Award 2010
Plumbing and Fire Sprinklers Award 2010
Professional Diving Industry (Industrial) Award 2010
Professional Diving Industry (Recreational) Award 2010
Professional Employees Award 2010
Seagoing Industry Award 2010
Social, Community, Home Care and Disability Services Industry Award 2010
State Government Agencies Administration Award 2010
Stevedoring Industry Award 2010
Storage Services and Wholesale Industry Award 2010
Surveying Award 2010
Travelling Shows Award 2010
Waste Management Award 2010
1 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014; Ai Group correspondence, 15 October 2014.
120
Attachment E—Replacement Subclause for Excessive Annual
Leave
The awards the Employer Group proposes to be varied to include the new subclause relating
to excessive annual leave (Employer Group propose replacing current provision (Schedule
3))2
Award title Existing clause
Aircraft Cabin Crew Award 2010 25.4
Airport Employees Award 2010 31.5
Aluminium Industry Award 2010 22.6
Business Equipment Award 2010 31.7
Car Parking Award 2010 25.5
Cemetery Industry Award 2010 24.3
Coal Export Terminals Award 2010 19.7
Concrete Products Award 2010 26.5
Contract Call Centres Award 2010 27.5
Electrical, Electronic and Communications Contracting Award 2010 28.5
Food, Beverage and Tobacco Manufacturing Award 2010 34.7
Graphic Arts, Printing and Publishing Award 2010 37.7
Horticulture Award 2010 25.7
Joinery and Building Trades Award 2010 32.5
Manufacturing and Associated Industries and Occupations Award 2010 41.6
Marine Tourism and Charter Vessels Award 2010 23.4
Nursery Award 2010 27.5
Oil Refining and Manufacturing Award 2010 26.7
Pastoral Award 2010 23.5
Pest Control Industry Award 2010 24.4
Pharmaceutical Industry Award 2010 26.5
Poultry Processing Award 2010 27.5
Road Transport and Distribution Award 2010 29.4
Road Transport (Long Distance Operations) Award 2010 23.3
Seafood Processing Award 2010 27.6
Telecommunications Services Award 2010 23.4
Timber Industry Award 2010 33.6
Transport (Cash in Transit) Award 2010 29.5
Vehicle Manufacturing, Repair, Services and Retail Award 2010 29.4
Water Industry Award 2010 27.4
Wine Industry Award 2010 30.5
2 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014; Ai Group correspondence, 15 October 2014.
121
Attachment F—Analysis of Excessive Annual Leave Provisions in
Awards
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Aboriginal Community
Controlled Health Services
Award 2010
8 wks =4 wks - - - n/a
Aged Care Award 2010 No excessive leave provision 2
Air Pilots Award 2010 Within 12
months of
accrual or
15 months
of the start
of the last
period of
leave
- - - - n/a
Aircraft Cabin Crew Award
2010
8 wks =4 wks =25% of
balance
- - 3
Airline Operations—Ground
Staff Award 2010
8 wks =4 wks - - - n/a
Airport Employees Award 2010 =8 wks =4 wks = 25%
of balance
- Y 3
Alpine Resorts Award 2010 30 days =4 wks - - - n/a
Aluminium Industry Award
2010
8 wks
(10
wks)*
= 4 wks - =8 wks - 3
Ambulance and Patient
Transport Industry Award 2010
Within 6
months of
accrual or
other by
agreement
=4 wks
( or
7 days^)
4 wks, or
other
amount by
agreement
- Y n/a
Amusement, Events and
Recreation Award 2010
No excessive leave provision 2
Animal Care and Veterinary
Services Award 2010
No excessive leave provision 2
Aquaculture Industry Award
2010
Within
18 months
of accrual
=4 wks - - Y n/a
Architects Award 2010 Within 4
months of
accrual or
12 months
by
agreement
=1
month
=2 wks - Y n/a
Asphalt Industry Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
Banking, Finance and
Insurance Award 2010
8 wks =4 wks - - - n/a
http://www.fwc.gov.au/documents/modern_awards/award/ma000019/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000019/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000054/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000079/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000114/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000114/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000098/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000098/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000060/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000060/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000092/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000049/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000048/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000048/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000047/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000047/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000046/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
122
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Black Coal Mining Industry
Award 2010
Within 12
months of
accrual
unless
otherwise
agreed
=4 wks - - - n/a
Book Industry Award 2010 No excessive leave provision 2
Broadcasting and Recorded
Entertainment Award 2010
Within
18 months
of accrual
=4 wks - - Y n/a
Building and Construction
General On-site Award 2010
No excessive leave provision 2
Business Equipment Award
2010
8 wks =4 wks =25% of
balance
- Y 3
Car Parking Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Cement and Lime Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
Cemetery Industry Award 2010 = 18
months
- - - - 3
Children’s Services Award
2010
8 wks =4 wks - - - n/a
Cleaning Services Award 2010 No excessive leave provision 2
Clerks—Private Sector Award
2010
8 wks =4 wks - - - n/a
Coal Export Terminals Award
2010
=8 wks
(=10
wks)*
=4 wks =25% of
balance
- Y 3
Commercial Sales Award 2010 8 wks (or
a
proportion
ate amount
for a PT
employee)
=4 wks - - - n/a
Concrete Products Award 2010 =8 wks =4 wks = 25%
of balance
- Y 3
Contract Call Centres Award
2010
=8 wks =4 wks =25% of
balance
- Y 3
Corrections and Detention
(Private Sector) Award 2010
No excessive leave provision 2
Cotton Ginning Award 2010 No excessive leave provision 2
Dredging Industry Award 2010 No excessive leave provision 2
Dry Cleaning and Laundry
Industry Award 2010
No excessive leave provision 2
Educational Services (Post-
Secondary Education) Award
2010
No excessive leave provision 2
Educational Services (Schools)
General Staff Award 2010
No excessive leave provision n/a
Educational Services
(Teachers) Award 2010
No excessive leave provision n/a
http://www.fwc.gov.au/documents/modern_awards/award/ma000077/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000077/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000076/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000076/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000075/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000075/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000075/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000096/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000096/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000085/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000024/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000110/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000110/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000023/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000023/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000056/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000083/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000045/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000045/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000002/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000002/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000022/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000120/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000120/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000070/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000055/default.htm
https://aurionss.asp.aurion.com.au/fwcprd/
http://www.fwc.gov.au/documents/modern_awards/award/ma000021/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000021/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000020/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000020/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000091/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000091/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000001/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000001/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
123
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Electrical Power Industry
Award 2010
=8 wks =4 wks =25% of
balance
- Y n/a
Electrical, Electronic and
Communications Contracting
Award 2010
8 wks
(10
wks)*
=4 wks =25% of
balance
- Y 3
Fast Food Industry Award 2010 No excessive leave provision 2
Fire Fighting Industry Award
2010
No excessive leave provision 2
Fitness Industry Award 2010 No excessive leave provision 2
Food, Beverage and Tobacco
Manufacturing Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Funeral Industry Award 2010 No excessive leave provision 2
Gardening and Landscaping
Services Award 2010
Within
18 months
of accrual
=4 wks - - Y n/a
Gas Industry Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
General Retail Industry Award
2010
8 wks =4 wks - - - n/a
Graphic Arts, Printing and
Publishing Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Hair and Beauty Industry
Award 2010
No excessive leave provision 2
Health Professionals and
Support Services Award 2010
No excessive leave provision 2
Higher Education Industry—
Academic Staff—Award 2010
=30 days =2
months
- - - n/a
Higher Education Industry—
General Staff—Award 2010
=30 days =2
months
=20 days - - n/a
Horse and Greyhound Training
Award 2010
Within
18 months
of accrual
=4 wks - - Y n/a
Horticulture Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Hospitality Industry (General)
Award 2010
8 wks =4 wks - - - n/a
Hydrocarbons Field Geologists
Award 2010
No excessive leave provision 2
Hydrocarbons Industry
(Upstream) Award 2010
8 wks
(10
wks)*
=4 wks - - Y n/a
Joinery and Building Trades
Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Journalists Published Media
Award 2010
No excessive leave provision (but may direct employee to take
leave)
n/a
Labour Market Assistance
Industry Award 2010
No excessive leave provision 2
Legal Services Award 2010 8 wks =4 wks - - - n/a
Live Performance Award 2010 No excessive leave provision 2
Local Government Industry
Award 2010
8 wks =4 wks - =8 wks - n/a
http://www.fwc.gov.au/documents/modern_awards/award/ma000112/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000112/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000081/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000116/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000099/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000099/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000067/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000067/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000029/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000029/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000062/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000062/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000064/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000064/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000009/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000009/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000028/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000008/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000008/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000007/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000007/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000006/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000006/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000027/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000027/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000005/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000005/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000026/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000026/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000004/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000004/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000061/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000101/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000101/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000105/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000073/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000073/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000094/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000111/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000111/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000003/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000025/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000025/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000025/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000088/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000088/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
124
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Mannequins and Models Award
2010
No excessive leave provision 2
Manufacturing and Associated
Industries and Occupations
Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Marine Tourism and Charter
Vessels Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Marine Towage Award 2010 No excessive leave provision n/a
Maritime Offshore Oil and Gas
Award 2010
No excessive leave provision 2
Market and Social Research
Award 2010
No excessive leave provision 2
Meat Industry Award 2010 No excessive leave provision 2
Medical Practitioners Award
2010
No excessive leave provision 2
Mining Industry Award 2010 8 wks
(10
wks)*
=4 wks - - Y n/a
Miscellaneous Award 2010 No excessive leave provision 2
Mobile Crane Hiring Award
2010
Within 6
months of
accrual
= 4 wks n/a
Nursery Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Nurses Award 2010 Within
6 months
of accrual
n/a
Oil Refining and Manufacturing
Award 2010
8 wks
(10
wks)*
=4 wks - =1
year’s
accrual
Y 3
Passenger Vehicle
Transportation Award 2010
8 wks =4 wks - - Y n/a
Pastoral Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Pest Control Industry Award
2010
=8 wks =4 wks =25% of
balance
- Y 3
Pharmaceutical Industry Award
2010
=8 wks =4 wks =25% of
balance
- Y 3
Pharmacy Industry Award 2010 No excessive leave provision 2
Plumbing and Fire Sprinklers
Award 2010
No excessive leave provision 2
Port Authorities Award 2010 8 wks =4 wks - - Y n/a
Ports, Harbours and Enclosed
Water Vessels Award 2010
Within 6
months of
accrual
=14
days
- - - n/a
Poultry Processing Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Premixed Concrete Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
Professional Diving Industry
(Industrial) Award 2010
No excessive leave provision 2
http://www.fwc.gov.au/documents/modern_awards/award/ma000108/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000108/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000057/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000074/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000052/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000052/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000051/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000036/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000036/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000012/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000069/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000069/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000097/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000097/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000035/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000063/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000063/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000072/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000072/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000034/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000033/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000032/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000032/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000104/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000011/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000031/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000031/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000059/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000030/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000030/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000086/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000086/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000050/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000093/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000093/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000010/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000010/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000010/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000117/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000117/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
125
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Professional Diving Industry
(Recreational) Award 2010
No excessive leave provision 2
Professional Employees Award
2010
No excessive leave provision 2
Quarrying Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
Racing Clubs Events Award
2010
Within
18 months
of accrual
=4 wks - - Y n/a
Racing Industry Ground
Maintenance Award 2010
Within
18 months
of accrual
=4 wks - - Y n/a
Rail Industry Award 2010 8 wks =4 wks - - Y n/a
Real Estate Industry Award
2010
4 wks =4 wks - - - n/a
Registered and Licensed Clubs
Award 2010
8 wks =4 wks - - - n/a
Restaurant Industry Award
2010
8 wks =4 wks - Employee
can retain
at least
4 wks
- n/a
Road Transport (Long Distance
Operations) Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Road Transport and
Distribution Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Salt Industry Award 2010 8 wks
(10
wks)*
=4 wks - - Y n/a
Seafood Processing Award
2010
=8 wks =4 wks = 25%
of balance
- Y 3
Seagoing Industry Award 2010 No excessive leave provision 2
Security Services Industry
Award 2010
Within 24
months of
accrual
=28
days
- - Y n/a
Silviculture Award 2010 Within
18 months
of accrual
=4 wks - - Y n/a
Social, Community, Home Care
and Disability Services Industry
Award 2010
No excessive leave provision 2
Sporting Organisations Award
2010
Within
18 months
of accrual
=4 wks - - Y n/a
State Government Agencies
Administration Award 2010
No excessive leave provision 2
Stevedoring Industry Award
2010
No excessive leave provision 2
Storage Services and Wholesale
Award 2010
No excessive leave provision 2
Sugar Industry Award 2010 8 wks =4 wks - - - n/a
Supported Employment
Services Award 2010
8 wks =4 wks - - - n/a
http://www.fwc.gov.au/documents/modern_awards/award/ma000103/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000103/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000087/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000084/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000084/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000053/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000053/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000121/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000121/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000082/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000082/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000100/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000100/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000100/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000040/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000016/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000016/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000122/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000068/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000068/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000107/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000038/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000038/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000039/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000039/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000119/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000119/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000058/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000058/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000106/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000106/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000015/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000014/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000014/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000013/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000013/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000037/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000065/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000065/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000109/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000109/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
126
Modern award Amount of
leave
accrued
Notice to
be given
by
employer
Maximum
amount of
leave to be
taken
Retained
balance of
leave after
leave
taken
Employer
and
employee
unable to
reach
agreement
Ai Group
schedule
2 = insert
3 = replace
n/a = not in
submission
Surveying Award 2010 No excessive leave provision 2
Telecommunications Services
Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Textile, Clothing, Footwear and
Associated Industries Award
2010
Within
18 months
of accrual
=4 wks - - Y n/a
Timber Industry Award 2010 =8 wks =4 wks = 25%
of balance
- Y 3
Transport (Cash in Transit)
Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Travelling Shows Award 2010 No excessive leave provision 2
Vehicle Manufacturing, Repair,
Services and Retail Award 2010
=8 wks =4 wks =25% of
balance
- Y 3
Waste Management Award
2010
No excessive leave provision 2
Water Industry Award 2010 8 wks =4 wks - = 8 wks - 3
Wine Industry Award 2010 =8 wks =4 wks =25% of
balance
- Y 3
Wool Storage, Sampling and
Testing Award 2010
8 wks
(10
wks)*
=4 wks - - Y n/a
* Employees who are entitled to 5 weeks’ annual leave may accrue up to 10 weeks’ leave.
^ In unforeseen circumstances only.
http://www.fwc.gov.au/documents/modern_awards/award/ma000044/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000044/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000090/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000113/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000043/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000043/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000089/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000089/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000102/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000042/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000042/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000071/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000017/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000017/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000017/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000041/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000041/default.htm
http://www.fwc.gov.au/documents/modern_awards/award/ma000066/default.htm
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
https://www.fwc.gov.au/sites/awardsmodernfouryr/common/AM201447-corr-AiG-151014.pdf
127
Attachment G—New Subclause for Close-Down
The 44 awards the Employer Group proposes to be varied to include the new subclause
relating to close down (Employer Group propose insertion of new provision).3
Award title
Aged Care Award 2010
Air Pilots Award 2010
Airport Employees Award 2010
Amusement, Events and Recreation Award 2010
Architects Award 2010
Book Industry Award 2010
Clerks—Private Sector Award 2010 ^
Commercial Sales Award 2010 ^
Corrections and Detention (Private Sector) Award 2010
Cotton Ginning Award 2010
Dredging Industry Award 2010
Dry Cleaning and Laundry Industry Award 2010
Educational Services (Schools) General Staff Award 2010 ^
Educational Services (Teachers) Award 2010 ^
Fast Food Industry Award 2010
Fire Fighting Industry Award 2010
Fitness Industry Award 2010
Funeral Industry Award 2010
Health Professionals and Support Services Award 2010 ^
Horticulture Award 2010
Hydrocarbons Field Geologists Award 2010
Labour Market Assistance Industry Award 2010
Live Performance Award 2010
Mannequins and Models Award 2010
Marine Tourism and Charter Vessels Award 2010
Marine Towage Award 2010
Maritime Offshore Oil and Gas Award 2010
Market and Social Research Award 2010
Medical Practitioners Award 2010
Pastoral Award 2010
Pharmacy Industry Award 2010
Port Authorities Award 2010
Ports, Harbours and Enclosed Water Vessels Award 2010
Professional Diving Industry (Industrial) Award 2010
Professional Diving Industry (Recreational) Award 2010
Rail Industry Award 2010
Seagoing Industry Award 2010
3 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014; Ai Group correspondence, 15 October 2014.
128
Award title
Social, Community, Home Care and Disability Services Industry Award 2010
Sporting Organisations Award 2010
State Government Agencies Administration Award 2010
Stevedoring Industry Award 2010
Transport (Cash in Transit) Award 2010
Travelling Shows Award 2010
Waste Management Award 2010
Notes:
^ These five awards currently contain close-down provisions.
Two awards that do not contain close-down provision were not the subject of the Ai Group claim:
Higher Education Industry—Academic Staff—Award 2010
Passenger Vehicle Transportation Award 2010
21 awards to be varied to include the new subclause relating to close-down (Employer Group
propose insertion of new provision).4
Award title
Airline Operations—Ground Staff Award 2010
Building and Construction General On-site Award 2010
Cleaning Services Award 2010
Electrical, Electronic and Communications Contracting Award 2010
Food, Beverage and Tobacco Manufacturing Award 2010
Graphic Arts, Printing and Publishing Award 2010
Joinery and Building Trades Award 2010
Manufacturing and Associated Industries and Occupations Award 2010
Meat Industry Award 2010
Mobile Crane Hiring Award 2010
Pharmaceutical Award 2010
Plumbing and Fire Sprinklers Award 2010
Poultry Processing Award 2010
Professional Employees A ward 2010
Seafood Processing Award 2010
Telecommunications Services Award 2010
Textile, Clothing, Footwear and Associated Industries Award 2010
Timber Industry Award 2010
Vehicle Manufacturing, Repair, Services and Retail Award 2010
Water Industry Award 2010
Wine Industry Award 2010
4 ACCI submission, 21 May 2014 at Schedule 5; Ai Group correspondence, 21 May 2014.
129
Attachment H—New Subclause for Annual Leave in Advance
The 48 awards the Employer Group proposes to be varied to include the new subclause
relating to taking annual leave in advance of accrual (Employer Group propose insertion of
new provision (Schedule 6)).5
Award title
Aboriginal Community Controlled Health Services Award 2010
Aged Care Award
Air Pilots Award 2010
Aircraft Cabin Crew Award 2010
Ambulance and Patient Transport Industry Award 2010
Amusement, Events and Recreation Award 2010
Architects Award 2010
Book Industry Award 2010
Building and Construction General On-site Award 2010
Cemetery Industry Award 2010
Coal Export Terminals Award 2010
Corrections and Detention (Private Sector) Award 2010
Cotton Ginning Award 2010
Dredging Industry Award 2010
Dry Cleaning and Laundry Industry Award 2010
Educational Services (Teachers) Award 2010
Electrical Power Industry Award 2010
Fire Fighting Industry Award 2010
Fitness Industry Award 2010
Funeral Industry Award 2010
Higher Education Industry—Academic Staff—Award 2010
Higher Education Industry—General Staff—Award 2010
Hospitality Industry (General) Award 2010
Hydrocarbons Field Geologists Award 2010
Labour Market Assistance Industry Award 2010
Mannequins and Models Award 2010
Maritime Offshore Oil and Gas Award 2010
Medical Practitioners Award 2010
Miscellaneous Award 2010
Nurses Award 2010
Plumbing and Fire Sprinklers Award 2010
5 Ai Group correspondence, 21 May 2014; ACCI correspondence, 21 May 2014.
130
Ports, Harbours and Enclosed Water Vessels Award 2010
Professional Diving Industry (Industrial) Award 2010
Professional Diving Industry (Recreational) Award 2010
Professional Employees Award 2010
Registered and Licensed Clubs Award 2010
Restaurant Industry Award 2010
Seagoing Industry Award 2010
Social, Community, Home Care and Disability Services Industry Award 2010
Sporting Organisations Award 2010
State Government Agencies Administration Award 2010
Stevedoring Industry Award 2010
Storage Services and Wholesale Industry Award 2010
Supported Employment Services Award 2010
Surveying Award 2010
Textile, Clothing, Footwear and Associated Industries Award 2010
Travelling Shows Award 2010
Waste Management Award 2010
Note: Attachment C of the Fair Work Commission Background paper—Annual leave common issue, 30 May 2014 included the following
additional awards in the 76 modern awards classified as containing limited provisions permitting taking leave in advance of accrual:
Maritime Offshore Oil and Gas Award 2010
Nurses Award 2010
131
Attachment I—New Subclause for EFT Payment
The 51 awards the Employer Group proposes to be varied by inserting new subclause relating
to the electronic transfer payment (EFT) of annual leave.
Award title
Air Pilots Award 2010
Aircraft Cabin Crew Award 2010
Airline Operations—Ground Staff Award 2010
Airport Employees Award 2010
Ambulance and Patient Transport Industry Award 2010
Aquaculture Industry Award 2010
Asphalt Industry Award 2010
Black Coal Mining Industry Award 2010
Broadcasting and Recorded Entertainment Award 2010
Building and Construction General On-site Award 2010
Car Parking Award 2010
Cement and Lime Award 2010
Coal Export Terminals Award 2010
Concrete Products Award 2010
Contract Call Centres Award 2010
Electrical, Electronic and Communications Contracting Award 2010
Food, Beverage and Tobacco Manufacturing Award 2010
Gardening and Landscaping Services Award 2010
Graphic Arts, Printing and Publishing Award 2010
Horse and Greyhound Training Award 2010
Horticulture Award 2010
Hydrocarbons Industry (Upstream) Award 2010
Joinery and Building Trades Award 2010
Legal Services Award 2010
Live Performance Award 2010
Manufacturing and Associated Industries and Occupations Award 2010
Market and Social Research Award 2010
Meat Industry Award 2010
Mining Industry Award 2010
Nursery Award 2010
Nurses Award 2010
Oil Refining and Manufacturing Award 2010
Pastoral Award 2010
Pest Control Industry Award 2010
Pharmaceutical Industry Award 2010
132
Premixed Concrete Award 2010
Professional Diving Industry (Industrial) Award 2010
Quarrying Award 2010
Racing Clubs Events Award 2010
Racing Industry Ground Maintenance Award 2010
Real Estate Industry Award 2010
Road Transport (Long Distance Operations) Award 2010
Salt Industry Award 2010
Seafood Processing Award 2010
Security Services Industry Award 2010
Silviculture Award 2010
Storage Services and Wholesale Award 2010
Telecommunications Services Award 2010
Timber Industry Award 2010
Transport (Cash in Transit) Award 2010
Vehicle Manufacturing, Repair, Services and Retail Award 2010
133
Attachment J—Legislative Provisions Relating to Annual Leave
During proceedings before a Full Bench of the Fair Work Commission on 16 October 2014, His Honour, Justice Ross, directed the Ai Group, the ACCI and the
ACTU to file a joint document that summarises the legislative provisions contained in the Workplace Relations Act 1996 and state/territory legislation regarding
annual leave. The table below contains the key legislative provisions regarding annual leave, as agreed between the aforementioned parties, extracted from the
joint submission provided on 14 November 2014. The table also indicates where the relevant legislation has been repealed. State/territory legislation that has not
been repealed only has application to employees of employers who are not national system employers.
General Rules
regarding Taking
Annual Leave
Accrual and
Accumulation
Close-Down Right of Employer to
Direct Employee to
Take Annual Leave
Cashing Out Payment for Annual
Leave`
Leave in Advance
Federal: Workplace Relations Act 1996 (repealed)
Section 172 Operation of the Australian Fair Pay and Conditions Standard & Section 230 Agreement between employees and employers
Section 236(1) – (4)
Rules about taking
annual leave
Section 234(1) and (4)
Annual leave – accrual,
crediting and
accumulation rules
Section 236(5) Rules
about taking annual
leave
Section 236(6) Rules
about taking annual
leave
Section 233 Entitlement
to cash out annual leave
Section 235 Annual
leave – payment rules
New South Wales: Annual Holidays Act 1944
Section 5(1)(a) Special provisions-annual holidays otherwise than under this Act
Section 3(2) - (4) Annual
holidays with pay
Section 3(1) Annual
holidays with pay
Section 4A(2)-(7)
Annual close-down
Section 3 (6)(a) Annual
holidays with pay
Section 3(5) Annual
holidays with pay
Section 3(6)(b) Annual
holidays with pay
Section 3(3) and (7)
Annual holidays with
pay
Queensland: Industrial Relations Act 1999
Section 41 Relationship to other rights and industrial instruments & Section 71CA Queensland Employment Standards subject to provisions of modern industrial instrument
Section 12(1) Taking
annual leave
Section 71EC(1)
Section 11(2) and (7)
Entitlement
Section 71EA(1) and (4)
Section 12(2) Taking
annual leave
Section 71EC(2)
Section 71EG
Requirements for
cashing out annual leave
13 Payment for annual
leave
Section 71EE
Section 12(3) - (4)
Taking
annual leave
Section 71AE(3) – (4)
134
General Rules
regarding Taking
Annual Leave
Accrual and
Accumulation
Close-Down Right of Employer to
Direct Employee to
Take Annual Leave
Cashing Out Payment for Annual
Leave`
Leave in Advance
South Australia: Fair Work Act 1994
Schedule 4 Minimum
standard for annual leave
4(1)—Taking annual
leave
Schedule 4 Minimum
standard for annual leave
3—Accrual of annual
leave entitlement
Schedule 4 Minimum
standard for annual leave
4(2)(b)—Taking annual
leave
Schedule 4 Minimum
standard for annual leave
4(2)(a) and (3)—Taking
annual leave
Schedule 4 Minimum
standard for annual leave
5 – Annual leave to be
on full pay
Western Australia: Minimum Conditions of Employment Act 1993
25(1) and (2) Annual
leave, when may be
taken
23(1), (2) and (2a) Paid
annual leave, entitlement
to
8 Limited contracting-
out of annual leave
conditions
24(1) Annual leave
payments, when to be
made
Tasmania: Industrial Relations Act 1984
Section 47AA(2) Division 2A - Minimum conditions of employment relating to all employees - Purpose and application of Division
47AE(4)-(6) Annual
leave
47AE(1) and (8) Annual
leave
Section 47AE(7) Annual
leave
Victoria: Industrial Relations Act 1979 (repealed)
Section 59(1)(a)
Section 58(1)(a) and (d) Section 58(1)(b) Section 58(1)(d) Section 58(1)(d)
Australian Capital Territory: Annual Leave Act 1973 (repealed)
Section 14(2) No contracting out
Section 4(1) Annual
Leave
Section 7Leave to be
taken within 6 months
Section 4(1) and 5 Section 12 Close-down Section 10 Employer
may require employee to
take annual leave
Section 11(1) No
payment instead of leave
Section 8 Payment of
leave pay
Northern Territory: Annual Leave Act
Section 15 Exemptions
Section 6(1)- (3) and (8)
-(9) Annual leave
Section 12 Close down Section 6(9) Annual
leave
Section 6(4) Annual
leave
Section 9 Pay for annual
leave
Section 14 When
payment to be made
Section 8 Annual leave
taken before due
