There are times when employees may experience financial difficulties and may opt to cash in their leave accruals instead of taking the time off. In order for employees to access their leave in the form of cash, there are certain requirements that must be met.
Annual leave
All modern awards have a clause regarding the cashing out of annual leave. While awards can have slightly different rules on cashing out annual leave, there are a few that are consistent:
- The employee needs to have at least four weeks of accrued annual leave left after the cash-out.
- Each time an employee requests to cash out annual leave, the agreement must be made in writing.
- An employee cannot cash out more than 2 weeks of annual leave in a 12-month period.
Employees under an enterprise agreement can only cash out annual leave if the agreement allows it. An employee will need to have at least four weeks of accrued annual leave left over after the cash-out and a written agreement will be required each time the employee cashes out their annual leave. Employers should review their Enterprise Agreements to ensure they are satisfying all the requirements for cashing out annual leave.
Award-free or agreement-free employees are able to cash out their annual leave by making an agreement with their employer in writing. Any agreement must ensure the employee has a minimum of four-weeks accrued annual leave remaining after the cash-out.
Any employee that cashes out their annual leave, must be paid the same amount as what the employee would have received if they had taken the leave. For example, if an employee is entitled to annual leave loading, the employee is entitled to receive the annual leave loading on the amount of leave they have cashed out.
Long service leave
Long service leave may be cashed out in one of two ways:
- If the modern award or enterprise agreement allows it; or
- An application is made to the Queensland Industrial Relations Commission (QIRC)
At this point in time, no modern award has a provision regarding the cash-out of long service leave. Employees under an enterprise agreement will need to follow the appropriate steps to cash out long service leave.
The alternative is to make an application on compassionate grounds, or on the grounds of financial hardship, to the QIRC. Employees are required to fill out Form 13 and submit it to the QIRC and the Commission will then determine whether an order of payment should be made on compassionate
Personal leave
There are very limited circumstances where an employee can cash out their unused personal or carer’s leave. Employees under an enterprise agreement may be able to cash out personal or carer’s leave if the agreement allows for it. Most modern awards do not have a provision for the cashing out of personal or carer’s leave. However, the Timber Industry Award 2020 and the Stevedoring Award 2020 do have such provisions.
Timber Industry Award
If an employee has over 15 days of accumulated personal/carer’s leave, they can request in writing to cash out any unused personal or carer’s leave in excess of 15 days up to 64 hours for General Timber Stream employees and 38 hours for the Wood and Timber Furniture Stream employees. For example, a full-time employee with 18 days of unused personal or carer’s leave may request a cash out of four days (30.4 hours) of unused accrued personal or carer’s leave.
Stevedoring Award
In any year on 1 July, if an employee has accumulated more than 28 days of unused personal or carer’s leave, the employee may request to be paid the amount in excess of 28 days instead of taking the leave. For example, an employee on 1 July 2024 has accumulated 35 days of unused personal or carer’s leave – they can request to cash out seven days of personal or carer’s leave.
How can Business Chamber Queensland help?
Business Chamber Queensland members with HR services as part of their membership can contact the Workplace Advisory Services team:
P: 1300 731 988
E: [email protected]
A consultancy fee will apply to businesses who do not have a HR membership.
