Some employers have at times allowed employees to cash in some, or all of their accrued personal/carer’s leave as a bonus. Employers who allow or promote this practice believe it to be a way of managing absenteeism, with the rationale being that if an employee is aware that they can cash in accrued personal/carer’s leave, the employee will be more likely to attend work and not take a “sickie”.

Some employers have at times allowed employees to cash in some, or all of their accrued personal/carer’s leave as a bonus.  Employers who allow or promote this practice believe it to be a way of managing absenteeism, with the rationale being that if an employee is aware that they can cash in accrued personal/carer’s leave, the employee will be more likely to attend work and not take a “sickie”.

However, allowing an employee to cash in accrued personal/carer’s leave is illegal under the National Employment Standards (NES).  The NES provides the minimum terms and conditions of all employment conditions in Australia.  Section 100 of the Fair Work Act 2009, of which the NES is part states:

100. Paid personal/carer’s leave must not be cashed out except in accordance with permitted cashing out terms

Paid personal/carer’s leave must not be cashed out, except in accordance with cashing out terms included in a modern award or enterprise agreement under section 101.

Section 101 goes on to state:

101. Modern awards and enterprise agreements may include terms relating to cashing out paid personal/carer’s leave

(1) A modern award or enterprise agreement may include terms providing for the cashing out of paid personal/carer’s leave by an employee.

(2) The terms must require that:

(a) paid personal/carer’s leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid personal/carer’s leave being less than 15 days; and

(b) each cashing out of a particular amount of paid personal/carer’s leave must be by a separate agreement in writing between the employer and the employee; and

(c) 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

There are only three Awards that allow for the cashing in of personal/carer’s leave, they are the Timber Industry Award 2010, the Stevedoring Industry Award 2010 and the Black Coal Mining Industry Award 2010.  However, these Awards have very strict criteria as to when personal/carer’s leave may be cashed in.  Of course, if an employer has an approved Enterprise Agreement in place that permits the cashing in of personal/carer’s leave, they would not be in breach of any legislation in doing so.

Employers who do not have an Enterprise Agreement in place and are governed by an Award and who allow the cashing in of personal/carer’s leave, are exposing their business to prosecution as the practice is in breach of the Fair Work Act 2009.

 Further, where an employer can pay an employee an amount equal to any accrued personal/carer’s leave the employee has, that in no way extinguishes the employees legal right to claim all personal/carer’s leave that has been cashed in, at a later date as the accrued personal/carer’s will be deemed not to have been deducted from the employees accrual account in any way.

The employee would still be legally entitled to make a claim on the employer for all personal/carer’s leave that has been “cashed in” if the employee was unable to attend work for any period due to an illness of injury.