Cashing out annual leave can be a tricky process to navigate – so it’s important that you follow the rules governing cashing out an employee’s annual leave.
Annual leave can only be cashed out when an award or registered agreement allows it. Cashing out annual leave means an employee receives payment instead of taking time off work.
There are 4 main points to follow:
1) An employee needs to have at least 4 weeks annual leave left over 2) A written agreement needs to be made each time annual leave is cashed out 3) An employer can’t force or pressure an employee to cash out annual leave 4) The payment must be the same as what the employee would have been paid if they took the leave
This is a handy template you can use as a record of the agreement about cashing out annual leave: