Annual leave – can you cash it out?

Q. My employee has requested to cash out some of his annual leave to pay off some debts. Is this allowed under Fair Work legislation?

A: Employers should ensure they understand the rules around cashing out annual leave prior to agreeing to any requests to do so.

Employees can receive payment for annual leave instead of taking time off work only when an applicable modern award or registered agreement (e.g. enterprise agreement) allows it. There are also some rules around leave balances and the manner in which cashing out leave should be arranged that must be taken into consideration.

In short, employers will need to check applicable modern awards or registered agreements, and also consider any rules set out in the Fair Work Act 2009 prior to agreeing to cash out leave.

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