A full bench of the FWC decided in June 2015 that many awards, including the Timber Industry Award 2010, would be varied to reflect some changes to annual leave provisions. The changes were originally scheduled to come into effect late in October or early November, however, at the time of writing, submissions are still being taken by the FWC on the wording of the clauses.

This article discusses, in detail, draft changes to the award. Readers should confirm the final position by referring to the official version of the award at www.fwc.gov.au

DIRECTING AN EMPLOYEE TO TAKE ANNUAL LEAVE

Some employees like to let their leave accruals build up, either as a form of security in case of a “˜rainy day’, or because they want to take a significant holiday at some point in time. This can make an employer’s liabilities top-heavy on the balance sheet, and consequently, employers are usually keen to keep annual leave balances as low as they can.

The National Employment Standards (NES) allow an employer to direct an employee to take leave if they have accrued excessive leave, but there has been confusion about the process. The change to the award means that there will now be protocol for an employer and an employee to follow.

“˜Excessive leave’ is likely to be defined as two years of leave accrued. A full-time employee would accrue eight weeks of annual leave over two years, or ten weeks if they are a shift worker regularly working Sundays and public holidays. This means that an employer would only be able to direct an employee to take leave if they have accrued more than this threshold definition.

The parties will be required to attempt to agree on when the employee will take leave, but if no agreement is reached, the employer can give the employee eight weeks’ notice of the requirement to take annual leave. The employer will be able to direct an employee to take leave that will reduce their accrued entitlement no lower than six weeks, and the direction must be to take a minimum of one week’s leave.

CASHING IN ANNUAL LEAVE

For many years, employees who are not covered by an award have been allowed to cash in some of their annual leave. Award-covered employees were only allowed to cash in annual leave if their award or enterprise agreement allowed for it. The Timber Industry Award 2010 did not contain this kind of provision, so timber workers dependent on the award were not permitted to cash in annual leave.

This is about to change, as many awards will now be varied to include specific cashing in provisions.

There are a number of rules about how this will be done, including:

  • The employer and the employee have to make a written agreement to cash in leave.
  • The employee can cash in up to two weeks’ leave every 12 months, provided their accrued leave balance doesn’t fall below four weeks of leave. For example, if Bob has seven weeks of annual leave accrued, he would be able to make an agreement in writing with his employer to cash in two weeks of leave. By doing that, he still has five weeks of accrued leave left, which would comply with the award requirement. In another example, Mesut has five weeks of annual leave accrued, and he wants to cash in two weeks of leave. His employer cannot agree to that because he would then have fewer than four weeks of leave accrued. However, Mesut and his employer can agree to cash in one week of leave.
  • The employee has to be paid the full amount they would have been paid had they taken the leave, which would include annual leave loading.

PAYING IN ADVANCE

The final variation that will affect the Timber Industry Award 2010 is a recognition that employees are often paid by electronic funds transfer (EFT); finally, the award enters the 20th century!

The award currently makes employers pay an employee their annual leave before they start their leave. This can be awkward for the employer to manage, and can create a cash flow difficulty for small business employers.

The award will be changed to say that if an employee is paid by EFT, they can continue to be paid in accordance with their usual pay cycle while they’re on leave.

ACCRUING WHILE ON WORKERS COMPENSATION

In the September issue, I wrote about the confusion over whether or not employees accrue annual leave entitlements while they are off work on workers’ compensation. There was a bill before the senate that specified employees wouldn’t accrue annual leave while they were on workers’ compensation. Towards the end of October the government abandoned those changes in negotiations with the cross benches. This means that employees in a number of states around Australia will continue to accrue annual leave while on workers’ compensation.

 

Emma Watt is an independent industrial relations consultant with almost 20 years’ experience in the timber industry.

Phone: 0411 708 073 or Email: emma@emmawatt.com.au