The Australian Industry Group has applied to Fair Work Australia for changes to the Model Award Flexibility Clause - a term of all modern awards - which would allow individual award covered employees to agree with their employers on flexible leave arrangements including the cashing-out of annual leave.


Australian Industry Group Chief Executive Heather Ridout said that the Model Award Flexibility Clause, which enables Individual Flexibility Arrangements (IFAs) to be made between individual employees and employers, had promised much but had so far delivered little.


"Some of the problems can only be addressed through changes to the Fair Work Act which Ai Group is pursuing during the Fair Work Act Review (see link to submissions below). However, other problems can and should be addressed through changes to FWA's Model Award Flexibility Clause.


"Ai Group will argue that the Model Award Flexibility Clause has not achieved its stated purpose of providing flexibility to meet the genuine individual needs of employees and employers.


"Leave flexibility is extremely important to a very large number of individual employees and their employers. This includes the cashing-out of annual leave beyond four weeks of accrued leave if this is what an employee genuinely wants and if the employer agrees.


"Cashing-out of annual leave is usually initiated by employees, not employers. In circumstances where there is no enterprise agreement in place at a particular workplace it is unfair to deny an award-covered employee the opportunity to cash-out a portion of his or her annual leave, as is currently the case given the terms of modern awards.


"It is appropriate for Fair Work Australia to revisit the issue of cashing out of annual leave."


Ms Ridout said that Ai Group's proposed award variations provide extensive safeguards, including:

  • The safeguards in section 93 of the Fair Work Act (which include the requirement that only leave in excess of four weeks of accrued leave can be cashed out);
  • The requirement that an IFA be entered into by an individual employee and the employer to enable cashing out of annual leave;
  • The safeguards in sections 144 and 145 of the Fair Work Act;
  • The existing extensive safeguards in the Model Award Flexibility Clause;
  • The General Protections in the Fair Work Act which prohibit coercion, undue influence, undue pressure and misrepresentations.

"Since the Model Award Flexibility Clause was developed in 2008, a Full Bench of the Tribunal in a case pursued by Ai Group (Armacell and others [2010] FWAFB 9985), reinforced the importance of FWA not frustrating the intentions of the legislature when considering provisions which have been agreed upon between an employer and its employees permitting the cashing out of annual leave.


"Access to leave flexibility through the award system is particularly important to employees who work for small to medium sized businesses as they are typically not covered by enterprise agreements. Ai Group's proposed amendments would provide millions of award-covered employees and their employers with access to new flexible leave arrangements," Mrs Ridout said.