Employees may request to cash out some or all their leave entitlements, but before granting such requests, it’s crucial to understand the regulations surrounding leave cash outs.
Annual Leave:
Cashing out annual leave is permissible if the employee’s industrial instrument, such as an award or agreement, explicitly allows it.
Awards generally permit annual leave cash outs, with a maximum of 2 weeks allowed to be cashed out within a 12-month period. Employers should refer to their specific award for detailed provisions.
Agreements (e.g., Enterprise Agreements or EBAs) may allow annual leave cash outs if explicitly stated within the agreement. The terms for cashing out will align with the agreement’s provisions.
Employees not covered by an award or agreement can negotiate with their employer to cash out annual leave, provided the agreement is documented in writing. For all annual leave cash outs:
A written agreement must be in place.
The cash out amount must match what the employee would receive for taking a period of leave.
Employees must retain a minimum leave balance of at least 4 weeks after the cash out.
Long Service Leave:
Cash out of long service leave is permitted in South Australia, Tasmania, and Western Australia.
In Queensland, cashing out of long service leave may be possible under certain conditions, such as if allowed by an Enterprise Agreement or approved by the Industrial Relations Commission due to financial hardship.
The Australian Capital Territory, New South Wales, Northern Territory, and Victoria do not allow cashing out of long service leave.
Personal/Sick/Carers Leave:
Sick leave cash out is only allowed under specific awards such as the Timber Industry Award and the Stevedoring Industry Award. Employers should refer to these awards for the terms and conditions of cashing out.
Other than the exceptions mentioned above, sick leave cannot be cashed out by employees covered by awards, agreements, or those classified as award/agreement-free.
