The entitlement to paid annual leave is derived from Division 3, Section 23 of the Minimum Conditions of Employment Act 1993 (the Act). The Act applies to employers and employees operating in the Western Australian industrial relations system.
Entitlement to annual leave
An employee, other than a casual employee is entitled to paid annual leave for each year of service equivalent to the number of hours the employee would ordinarily work in a four-week period during that year, up to 152 hours.
An employee must provide at least two weeks’ notice of their intention to take annual leave. Generally, an employee has to work for 12 months before they can access their annual leave, unless agreement is reached between the employee and employer, or an award or agreement states that the leave can be taken earlier.
Annual leave accrual
An employee is entitled to accrue annual leave pro rata on a weekly basis. This weekly accrual is often more beneficial than the monthly accrual of paid annual leave in most State awards. CCI recommends employers seek advice to determine the relevant State award to ensure employees are receiving the most favorable leave entitlements. The provisions of the Act will override any less beneficial entitlements in a State award. Paid annual leave accrues progressively.
When does annual leave accrue?
Annual leave accrues on all ordinary hours and periods of paid leave including:
- paid annual leave
- paid leave for illness, injury or family care
- paid bereavement leave
- long service leave
When doesn’t annual leave accrue?
Paid annual leave does not accrue during periods of unpaid leave.
Payment of annual leave
An employee is entitled to be paid for a period of annual leave at the same time the employer would ordinarily pay their wages/salary. If an employee requests in writing to be paid prior to the commencement of the leave, the employer is required to comply with this request.
If an employer terminates an employee’s employment through no fault of the employee, or the employee lawfully leaves their employment with the employer before the employee has taken annual leave, then the employee is entitled to be paid for all of the unused accrued annual leave.
If an employee leaves their employment unlawfully (e.g. the employee fails to give the required notice period) or an employer dismisses an employee due to the fault of the employee, then the employee will not be entitled to the payment of any unused accrued annual leave that has accrued from an incomplete year. In this situation, an employee will only be entitled to payment for fully completed years of service upon termination.
If an employer terminates an employee for misconduct, the employee is only entitled to payment for any unused annual leave that accrued for any completed years of service before the misconduct occurred.
Employees are only entitled to annual leave loading if an award or agreement prescribes it. Members should seek assistance from the Employee Relations Advice Centre to determine any applicable awards.
Taking annual leave
An employer is required to reach an agreement with an employee as to when an employee may take annual leave. If no agreement is reached, an employer cannot unreasonably refuse the employee from taking annual leave which accrued more than than 12 months prior to the time that the employee wishes to take the leave.
If no agreement is reached, the employee is to give the employer at least two weeks’ notice of their intention to take leave.
This provision is often more favourable than the provisions contained in most State awards which enable the employer to direct the employee to take annual leave. The provisions of the Act will override any less beneficial provisions for the employee in a State award.
If an employer requires an employee to take a period of leave for the purpose of an annual close down, it is the employer’s responsibility to negotiate this with an employee.
Employees not entitled to paid annual leave under the Act
The Act excludes certain categories of people from its provisions as they fall outside the specified definition of an employee:
- Persons paid wholly by commission
- Piece workers
- Persons with disabilities in supported employment
- Volunteers
- National Trust (WA).
Cashing out of annual leave
When an employee has completed one year of service, they are entitled to cash out 50% of their accrued annual leave entitlement in each year of service if they are award-free, or the applicable award provides for cashing out of annual leave. This agreement must be made in writing with the employer and cannot be made a condition of employment. Importantly, an employee who cashes out a portion of their annual leave should receive an equivalent benefit in lieu.
An employer must not require an employee to cash out annual leave and must not exert undue influence or undue pressure on the employee when making a decision on whether to cash out.
For more information, contact the Employee Relations Advice Centre on (08) 9365 7660 or email [email protected].
