Correctly calculating and applying annual leave is a complicated, but important, part of engaging permanent staff. ACAPMA has released the ACAPMA Annual Leave Guide to assist Members with understanding the requirements and applying them in their own business. The Guide explores the requirements under the law, provides detailed review of the relevant Award clauses, as well as providing detailed worked examples for Fuel Transport staff, Fuel Retail staff and Clerical and support staff.
Where does the entitlement to annual leave come from?
When an employee goes on annual leave their payment and any applicable loadings need to be calculated in compliance with the Fair Work Act and the relevant industrial instrument, such as the Award or applicable agreements.
How much is an employee paid while on annual leave?
The answer will depend on the Award that the employee is engaged under, the employees Guaranteed Hours, the days and hours that the employee works their ordinary hours. This confluence of circumstances, means that a simple answer to the question is impossible, however, the payment for annual leave will require the business to have a clear understanding of; Ordinary Pay, Base Rate and Full Rate – and to carefully apply these.
The Right Rate and Inclusions: Ordinary Pay and Base Rate or Full Rate
The annual leave calculations are based on the concept of Ordinary Pay. Under the Fair Work Act the concept of Ordinary Pay refers to the Base Rate of: Amount due for a period of paid leave (National Employment Standards); and Rate on which penalties are calculated (s16 of the Fair Work Act). It is important to notes that some Awards provide for Full Rate payment.
Base Rate
Under the FWA and the NES the Base Rate does NOT include:
- Allowances
- Overtime
- Penalty Rates
- Loading
- Bonuses
Full Rate
Confusion can be caused by the use of Full Rate, which while sounding very similar, has a very different meaning under the FWA and the NES. Unlike Base Rate, Full Rate is defined by Section 18 of the FWA as: “The amount the employee would have received if they had have been working in their standard role”.
Full Rate includes; allowances, overtime, penalty rates, loading and other bonuses as well as Superannuation.
Modern Awards
The definition of Ordinary Pay (Base Rate or Full Rate) can differ under each Modern Award.
For the Three main downstream petroleum Awards different types of Leave attract different definitions of Ordinary:
- Road Transport and Distribution Award 2020
- for fuel wholesale staff (tanker drivers etc)
- Taking or Cashing out Annual Leave = Base Rate + Leave Loading (17.5%) or the shift allowance/penalty rate that would have applied, whichever is the greater, but not both
- Annual Leave on Termination = as if they had taken the annual leave
- Vehicle Repair Service and Retail Award 2020
- for fuel retail staff (console operators etc)
- Taking or Cashing out Annual Leave = FULL Rate+ Leave Loading (17.5%) or the shift allowance/penalty rate that would have applied, whichever is the greater, but not both
- Annual Leave on Termination = FULL Rate but with NO LEAVE LOADING OR SHIFT ALLOWANCE
- Clerks – Private Sector Award 2020
- for clerical support staff
- Annual Leave = Base Rate + Leave Loading (17.5%) or the shift allowance/penalty rate that would have applied, whichever is the greater, but not both
Here to Help
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HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation emailing employment@acapma.com.au to get the advice and support of ACAPMA Employment Professionals its free for members.
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