1 July 2016

From 1 July 2016: 

The national minimum wage applies to employees who aren’t covered by an award or agreement.

This pay rate applies to employees whose employment is covered by a modern award and whose minimum pay rates are governed by that award.  Employers who pay award rates must check the relevant award to ensure that they are paying their employees according to the award. 

If you’re not sure which award applies to you, check the List of awardson the Fair Work Australia website.

Employees who earn more than the high income threshold and who are not covered by a modern award or enterprise agreement are not able to access the unfair dismissal jurisdiction.

In calculating whether an employee’s earnings are above the high income thresholds, the following must be included:


Changes to Annual Leave Provisions

The Fair Work Commission has finalised the model terms for provisions in annual leave clauses in modern awards.  The provisions which will be inserted in most awards relate to taking annual leave in advance, close-downs, excessive annual leave accruals, cashing out of annual leave and EFT payments during annual leave. In summary, these provisions are:

Granting Annual Leave in advance:  Employers and employees can agree for an employee to take leave in advance (i.e. before it is accrued).  The agreement must be made in writing and must state the period of leave granted in advance and the amount of leave to be taken.  The employer must retain a copy of this agreement.  If the employee’s employment is terminated before sufficient leave has been accrued to make up for the leave granted in advance, the employer may deduct any money that is due to the employee equal to the amount already paid to the employee in respect of that annual leave taken.

Close-down:  an employer may require an employee to take annual leave as part of a close-down of its operations, by giving at least four weeks’ notice.

Excessive Annual leave: Excessive leave is defined as leave accrued be an employee which is more than 8 weeks’ paid annual leave.  The employer and employee can discuss the excessive accrued annual leave to try to reach an agreement on how to reduce this leave.  If agreement cannot be reached, the employer can direct the employee to take annual leave, so long as the employee will still have at least 6 weeks of annual leave remaining after the directed amount of annual leave has been taken.  The employer cannot direct the employee to take less than one week of annual leave, and the employer cannot direct the employee to take a period of paid annual leave beginning less than 8 weeks, or more than 12 months, after the direction is given.

An employee who has an excessive leave accrual can also request an employer to grant up to 4 weeks of paid annual leave in any period of 12 months providing that they have excessive annual leave accrued for more than 6 months at the time that they make the request.  Granting the request must not result in the employee having 6 weeks or less of annual leave remaining.  The employee may not take less than one week of annual leave at a time, and this leave must not the taken sooner than 8 weeks or more than 12 months after the request is made.

Cashing Out of Annual Leave:  An employer and employee can agree to cashing out a particular amount of accrued paid annual leave.  The agreement must be in writing and must state the amount of leave to be cashed out, The payment to be made to the employee and the time that he payment is to be made.  There must be a separate agreement for each occasion when annual leave is cashed out.  The agreement has to be signed by the employer and the employee and retained as an employee record.  The payment must not be less than the amount that would have been payable had the employee taken the leave at the time the payment is made. Cashing out of annual leave must not  result in the employee’s remaining accrued entitlement to paid annual leave being less than 4 weeks. The maximum amount of accrued paid annual leave that may be cashed out in any period of 12 months is 2 weeks.

EFT and annual leave payments:  An employee paid by electronic funds transfer (EFT) may be paid in accordance with their usual pay cycle while on paid annual leave.


What employers should do

If you pay award wages to your employees, check the applicable awards to ensure that they are being paid correctly.

When the annual leave provisions are finalised, check that the provisions in your conditions of employment match the new annual leave provisions.  Inform your workers of any changes to their awards and make a copy of the relevant awards available to them.


More Information


You can find out more about minimum award wages and annual leave provisions, from the following links: