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Fairwork - Agreement to Cash Out Annual Leave

Cashing out annual leave means an employee receives payment instead of taking time off work.

Some awards and registered agreements allow annual leave to be cashed out, so check the award or registered agreement that covers your employee. Award and agreement-free employees may agree with their employer to cash out annual leave at any time. In all cases when cashing out is allowed, the following applies:

  • the employee must retain at least 4 weeks annual leave
  • the payment for cashed out annual leave must be the same as what the employee would have been paid if they took the leave
  • an employer can’t force or pressure an employee to cash out annual leave
  • there must be a written agreement with the employer.

An award or registered agreement may also limit the amount of annual leave an employee can cash out or the timeframe in which it can be cashed out.

If the award says that employees can cash out annual leave, employers and employees must make a record about the agreement to cash out annual leave on each occasion. This agreement must:

  • be signed by both the employee and the employer
  • say the amount of leave being cashed out
  • say the amount that will be paid for the leave
  • say the date this will be paid, and
  • if the employee is under 18, then it must be signed by their parent or guardian

Employers must keep a copy of this agreement with the employee’s records.

You can use this template as a record of the agreement about cashing out annual leave.

Before using this template, check your award or registered agreement for specific rules that may apply to you.

 For more information on cashing out annual leave, visit www.fairwork.gov.au/leave/annual-leave/cashing-out-annual-leave

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