Annual leave

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EmployerEmployee / worker

This information is only relevant to employers and employees in the WA state industrial relations system – sole traders, unincorporated partnerships, unincorporated trusts and some incorporated or not for profit organisations. Find out more on the Guide to who is in the WA state system page.

If you operate or are employed by a Pty Ltd business – you can find information on this topic on the Fair Work Ombudsman website.

Please note this is general information on annual leave based on the minimum entitlements for employees. WA awards may specify additional requirements relating to payment for annual leave and how and when annual leave is taken by employees. View the WA award summaries page for a list of summaries. 

COVID-19 annual leave flexibilities introduced

New flexibility provisions enabling employers and employees to agree to an employee taking twice as much annual leave at half pay or to agree for the employee to take annual leave in advance have been implemented through the COVID-19 General Order issued by the Western Australian Industrial Relations Commission to assist private sector employers and employees address the impacts of the COVID-19 coronavirus pandemic on their workplaces. 

More detail on each provision is outlined below.

The COVID-19 General Order applies to private sector award free employees and private sector employees covered by WA awards or registered industrial agreements. Where a WA award or industrial agreement contains a term provided for in the General Order that is more beneficial to an employee, then the more beneficial term will apply. Otherwise, where there is conflict between the terms of a WA award or industrial agreement and the General Order, the terms of the General Order will apply.

These new provisions are effective from 14 April 2020 and the COVID-19 General Order applies until 31 July 2020, unless extended.

Annual leave at half pay

The annual leave at half pay provisions in the COVID-19 General Order are:

  1. Instead of an employee taking paid annual leave at full pay, the employee and their employer may agree to the employee taking twice as much leave at half pay.

Example: 
Instead of an employee taking one week’s annual leave at full pay, the employee and their employer may agree to the employee taking two weeks’ annual leave at half pay.  In this example:

  • The employee’s pay for the two weeks’ leave is the same as the pay the employee would have been entitled to for one week’s leave at full pay; and
  • One week of leave is deducted from the employee’s annual leave accrual.
  1. Any agreement to take twice as much annual leave at half pay must be recorded in writing and signed by the employee (and a parent/guardian if the employee is under 18).
     
  2. The employer must keep the written agreement as part of the employee’s employment record.

The agreed period of leave must start before 31 July 2020, but may end after that date.

Granting annual leave in advance

The granting annual leave in advance provisions in the COVID-19 General Order are:

  1. An employee and employer may agree to an employee taking a period of annual leave in advance of the entitlement being accrued if all of the following conditions are met:
    1. any agreement to annual leave in advance must be recorded in writing and signed by the employee (and a parent/guardian if the employee is under 18); and
    2. the written agreement must state the amount of leave to be taken in advance and the date on which the leave will commence; and
    3. the employer must keep the written agreement as part of the employee’s employment record.
       
  2. If, on the termination of the employee’s employment, the employee has not accrued an entitlement to all of the period of paid annual leave taken in advance, the employer may deduct from any money due to the employee on termination an amount equal to the amount that was paid to the employee in respect of any part of the period of annual leave taken in advance to which an entitlement has not been accrued. This provision will continue to apply notwithstanding the expiration of the General Order.
     
  3. Where an agreement has been reached under this clause and the leave commenced before the expiration of the General Order, then the arrangement may continue to operate for the period agreed between the parties.

Frequently asked questions about annual leave

Who is entitled to annual leave?

Full time and part time employees are entitled to paid annual leave. Casual employees are not entitled to paid annual leave. Employees who are paid solely by commission or piece rate and are not covered by a WA award are not entitled to paid annual leave.

Full time employees are entitled to four weeks of annual leave for each year of completed service, paid up to a maximum of 152 hours.

Part time employees are entitled to annual leave of four weeks per year but paid on a pro rata basis according to the number of hours they work. For example if an employee works 20 hours per week they are entitled to 4 weeks of annual leave paid at 20 hours per week.

How do I calculate annual leave?

Annual leave accrues on a weekly basis and you can calculate how much annual leave an employee has accrued based on how many weeks they have worked:

  • a full time employee accrues 2.923 hours of annual leave for each completed week of work (based on the standard 38 hour week)
  • a part time employee will accrue the relevant proportion of 2.923 hour annual leave for each completed week of work.

Wageline’s Annual Leave Calculation Guide can help you work out annual leave entitlements for full time and part time employees.

Annual leave is a cumulative entitlement, which means that any leave that is not taken can be carried over to the next year.

What should employees be paid when they take annual leave?

Employees are to be paid their current rate of pay when they take annual leave. 

Some WA awards provide for payment of certain allowances and some penalty rates in certain circumstances while on annual leave.

Most WA awards require annual leave loading to be paid during annual leave.

Do employees have to be paid annual leave loading?

If a WA award applies to an employee, it is likely that they will be entitled to annual leave loading (usually 17.5% of wages) when they take annual leave.

Annual leave loading may also apply on leave paid out on termination. Many WA awards require employers to pay annual leave loading on fully accrued annual leave paid out on termination. Some WA awards also require employers to pay annual leave loading on pro rata annual leave paid out on termination.

Please check any specific requirements about annual leave loading in the applicable WA award summaries.

Employees who are award free do not receive annual leave loading unless it is specified in a contract of employment.

Can an employee cash out their annual leave?

Most WA awards do not provide for cashing out of annual leave. 

An employer can agree to an employee cashing out their annual leave but all of the following conditions must be satisfied:

  1. The employee is award free, or the applicable award provides for cashing out of annual leave.
  2. The employee must have at least one year's accrued annual leave.
  3. The employer and employee can only reach agreement to cash out up to 50% of the employee’s annual leave for an equivalent benefit (usually cash). 
  4. The agreement must be genuine (i.e. the employer cannot exert undue influence or pressure to reach the agreement to forego any amount of annual leave) and the agreement must be in writing. The agreement should be retained with time and wages records.
  5. The employer cannot make an offer of employment to somebody that requires them to agree to the cashing out of leave.

Does an employee have to work 12 months before they take any leave?

Generally, an employee needs to work for 12 months before they can take annual leave unless the employer agrees that the employee can access the annual leave earlier. Some awards contain specific provisions to enable annual leave to be taken earlier. For instance, the Restaurant, Tearoom and Catering Workers' Award provides that the employer and employee may agree in writing that annual leave may be given and taken before the completion of 12 months' continuous service.

Can an employer require an employee to take a period of annual leave at a particular time? 

Annual leave must generally be taken by agreement between the employer and employee.  An employer can give an employee a general direction to take annual leave, but cannot direct them as to when they must take the leave (i.e. cannot direct them to take the leave at a particular time). If annual leave has been accrued for more than 12 months and the parties cannot agree when the leave is to be taken, the employee may take the leave at a time suitable to them by giving the employer at least two weeks’ notice.  An award or industrial agreement which has a provision that enables an employer to require an employee to take annual leave at a particular time is of no effect.

Can an employee be required to take annual leave if a business is closed down over Christmas?

Annual leave must generally be taken by agreement between an employer and employee. Furthermore, under the Minimum Conditions of Employment Act, an employer cannot direct an employee to take annual leave at a particular time. This means that an award or industrial agreement provision which enables an employer to require an employee to take annual leave at a particular time, such as during a Christmas close down, is of no effect.

Where an employee is award free and they have a written contract of employment that allows their employer to direct the employee to take annual leave during a Christmas close down, it is likely the parties have ‘agreed’ that some of the employee’s annual leave is to be taken during a Christmas close down. It will therefore be lawful for the employer to direct the employee to take annual leave at that time. However, the direction to take annual leave must also be reasonable in the circumstances.

Where an employee is award free and they do not have a written contract of employment that allows their employer to direct the employee to take annual leave during a Christmas close down, the employer cannot lawfully direct the employee to take annual leave during the close down.

Can an employer refuse an employee’s request for annual leave?

If an employee accrued their annual leave more than 12 months ago, the employer cannot refuse their request to take annual leave.

Some WA awards include provisions on when employees can be required to take leave. For instance, the Shop and Warehouse (Wholesale and Retail Establishments) Award and the Hairdressers Award provides that employees shall be given and take annual leave within 6 months after the date it falls due.

Does an employee have to give their employer notice of an intention to take annual leave? How much notice is required?

Yes, an employee needs to give notice to their employer before taking annual leave.  

An employee can take annual leave with two weeks’ notice to their employer, if the leave was accrued more than 12 months ago. If the leave has not yet been accrued for 12 months, the employee needs to reach an agreement with their employer about taking the leave.

If an employee was sick while on annual leave, can this be changed to sick leave?

Most WA awards do not allow employees to convert annual leave to sick leave. There are a few WA awards that will allow this in certain circumstances.

Employees who are award free do not have an entitlement to convert annual leave to sick leave. 

What happens to annual leave if it is not all used on one year? 

Annual leave is a cumulative entitlement, which means that any leave that is not taken can be carried over to the next year.

What happens if the employee doesn’t have enough annual leave – can they still go on holiday?

There is no obligation on an employer to grant an employee time off (paid or unpaid) for annual leave if there is no entitlement.

Is annual leave paid out on termination?

Yes, an employee is entitled to be paid out annual leave on termination.

All untaken annual leave an employee has accrued, including pro rata annual leave, is paid out on termination if:

  • an employee leaves their employment lawfully; or
  • an employee's employment ends through no fault of their own.

If an employee does not leave their employment lawfully (e.g. they resign without giving the required notice) or they are dismissed for misconduct the employee will not be entitled to be paid out any pro rata annual leave.  

In the case of misconduct, an employee will also not be entitled to the payout of accrued annual leave that relates to a year of service that was completed after the misconduct occurred.

Some WA awards do provide for an employee to be paid pro rata leave on termination regardless of whether they leave employment lawfully or in cases of misconduct. If an employee is covered by a WA award, please check any specific requirements about annual leave paid out on termination in the relevant WA award summaries.

Many WA awards require employers to pay annual leave loading on fully accrued annual leave paid out on termination. Some WA awards also require employers to pay annual leave loading on pro rata annual leave paid out on termination. 

An employee who believes they have not been paid an annual leave entitlement due on termination can follow the process outlined on the Making a Complaint page to make a complaint to Private Sector Labour Relations at the Department of Mines, Industry Regulation and Safety. 

Please contact Wageline if you need additional information on annual leave obligations.

What records does an employer need to keep?

An employer must keep records of annual leave accrual and annual leave taken.

All state system employers are legally required to keep employment records that detail time worked, leave taken and pay received by employees.

Learn more on the Employment records - Employer obligations page

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