Q. Our company is currently negotiating a proposed new enterprise agreement. One of the bargaining representatives has suggested including a term which permits an employee to cash out a portion of their personal/carer's leave balance. The two modern awards relevant to the better off overall test (BOOT) are the Manufacturing and Associated Industries and Occupations Award and the Clerks – Private Sector Award. Neither award permits cashing out of personal/carer's leave. Management often receives requests from employees wanting to cash out some personal/carer's leave. While neither modern award allows cashing out of personal/carer's leave, does this mean such a term cannot be included in an enterprise agreement?  

A. Under the Fair Work Act (s101), an enterprise agreement (or a modern award) may include terms providing for the cashing out of personal/carer's leave by an employee. The terms must require that:  

  • The employee's paid personal/carer's leave accrued entitlement must have a balance of at least 15 days after cashing out.  
  • Each cashing out must be by a separate agreement in writing between the employer and the employee, and  
  • The employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.  

  

Modern awards  

Most modern awards do not contain terms that permit cashing out of personal/carer's leave. One modern award that does allow cashing out of personal/carer's leave is the Timber Industry Award. It provides differing entitlements depending on the industry stream in which an employee is employed. An employee may cash out accrued personal/carer's leave where the balance exceeds 15 days, up to a maximum payment as for 64 hours (General Timber Stream), or a maximum payment as for 38 hours (Wood and Timber and Timber Furniture Stream). The employee must retain a minimum balance of 15 days' personal/carer's leave.  
In the Pulp and Paper Stream, payment of excess accrued sick leave will be made to an employee, or an employee's deceased estate, in respect of accumulated entitlement:  

  • Retirement due to age or incapacity; or  
  • Termination of employment after 10 years of continuous service for other reasonable cause; or  
  • Death whilst an employee of the business.  

  

Bottom line  

An enterprise agreement may contain terms that permit cashing out of paid personal/carer's leave, subject to the requirements of section 101 of the Fair Work Act.