Annual leave over Christmas: loading, shutdowns and cashing out

Christmas is the most expensive fortnight of the year for a lot of trade businesses. The crew is on paid leave, the invoices stop because nobody’s on site, and the first claims of the new year often won’t be paid until late January. Knowing the number before the break is the difference between a good holiday and a tight one.

What your crew is owed

• Full-time employees get 4 weeks of paid annual leave a year under the National Employment Standards. Part-timers get it pro rata to their hours.
• It builds up week by week as they work their ordinary hours, and whatever isn’t taken carries over to the next year. For a 38-hour full-timer that’s about 2.9 hours a week.
• Casual employees don't get paid annual leave. Their casual loading is paid instead.

Leave loading

Leave loading isn’t in the National Employment Standards, but many awards and agreements add one, commonly 17.5% on top of the leave pay. Whether your crew gets it, and how it’s worked out, is in your award or EBA. Check it, because it’s easy to forget in the Christmas pay run and, where it applies, it’s owed on every day of annual leave they take.

The Christmas shutdown

If the whole business closes over Christmas, you may be able to direct the crew to take annual leave for the shutdown, but only in the way your award or agreement allows, and usually with notice. Award and agreement-free employees can be directed to take leave in a shutdown if the direction is reasonable.

Building and construction awards have their own close-down rules, so read yours before you put the shutdown dates out. Work out early what happens for anyone who hasn’t built up enough leave to cover the break; the award or agreement covers that too.

Cashing out annual leave

Some of the crew would rather have the money. Annual leave can only be cashed out if the rules let you, and for award-covered employees it’s the award that decides. Where an award allows it, the usual rules are:

1. 1
   A written agreement every time

   A separate written agreement for each cash-out, and you can't pressure anyone into it.
2. 2
   At least 4 weeks left afterwards

   Cashing out can't take their balance below 4 weeks.
3. 3
   A limit each year

   Awards commonly cap it at 2 weeks in any 12 months.
4. 4
   Paid in full

   They're paid what they'd have been paid to take the leave, loading included.

Check the Fair Work Ombudsman’s page and your award or EBA for the exact rules before you agree to one.

What it costs: an example

Five carpenters on $45 an hour, each taking two weeks of paid leave over the break:

Forecast it before you need it

To see the number coming, you need three things for every person on the crew:

• Their leave balance as at the last pay run.
• What they'll build up between now and the break.
• What leave they've already booked, and any cash-outs they've asked for.

Then multiply it out: hours × rate, plus loading, plus super, pay run by pay run up to the break. Do it in early November and you’ve got time to bring claims forward, chase what’s overdue or hold some cash back.