What is cashing out annual leave?
Cashing out annual leave is converting some accrued annual leave into a payment instead of taking time off, subject to strict conditions.
Cashing out annual leave means an employee receives a payment for some of their accrued annual leave instead of taking the leave as time off. It is only allowed where a Modern Award, enterprise agreement, or — for award/agreement-free employees — a written agreement permits it.
Strict safeguards apply under the National Employment Standards. The employee must keep a balance of at least 4 weeks' accrued annual leave after the cash-out, each cash-out must be in a separate written agreement, and the employee must be paid at least what they would have received had they taken the leave.
Key facts
- •Only allowed if a Modern Award, enterprise agreement, or written agreement permits it
- •The employee must retain at least 4 weeks of accrued annual leave after cashing out
- •Each cash-out requires a separate written agreement signed by the employee
- •Payment must be at least the amount the employee would have been paid for taking the leave
- •Many awards cap the amount that can be cashed out in a 12-month period
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Annual Leave Payout CalculatorFrequently asked questions
Can my employer force me to cash out my annual leave?
No. Cashing out must be genuinely agreed in writing each time. An employer cannot require or pressure you to cash out leave, and you must keep at least 4 weeks accrued afterwards.
How much annual leave can I cash out?
You must retain at least 4 weeks of accrued leave after cashing out, and many awards also cap the amount you can cash out in any 12-month period. Check your specific award or agreement.
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