Managing Excessive Annual Leave Accruals

Annual leave is essential for employee wellbeing but when leave balances grow too large, it can create operational and financial challenges for clubs. Therefore, proactive management is crucial.

The Registered and Licensed Clubs Award 2020 (the Award) provides prescriptive rules on how clubs can manage excessive leave accruals.

What Counts as Excessive Leave?

Under the Award, an employee has an excessive leave accrual if they have:

• More than eight weeks of annual leave for non-shift workers; or
• More than 10 weeks of annual leave for shift workers.

Note: To determine who amounts to a ‘shift worker’, please see our previous ClubLife Article, Who Qualifies as a Shiftworker? 

Step 1: Genuinely Try to Reach Agreement

Under the Award, the club must first genuinely try to reach agreement with the employee on how to reduce or eliminate their excessive leave accrual. This step must be undertaken before the club can issue any direction. Possible suggestions could include:

• Scheduling leave during quieter periods
• Splitting leave into smaller blocks
• Combining leave with public holidays and/or long service leave for longer breaks
• Locking in future periods of annual leave for anticipated events such as holidays, school holidays or life events etc, noting dates may be adjusted but the period of leave shall be taken
• As a benefit to the employee, reaching agreement to schedule leave during busier periods such as Christmas and New Year depending upon the operational needs of the club

Open communication between the club and an employee often resolves the issue without formal direction.

Step 2: Direction to Take Leave

If the club has genuinely tried to reach agreement, but agreement cannot be reached, the club may direct the employee to take annual leave, but only in accordance with clause 25.6 of the Award. The Award rules are prescriptive. All of the following must apply:

• The club provides at least 8 weeks’ written notice
• The directed leave must be at least one week or more in duration
• The leave must be taken within 12 months of the direction
• After the leave, the employee must still have at least six weeks’ annual leave remaining in their accruals.

The ClubsNSW Workplace Relations Team can assist member clubs with drafting a letter when issuing such directions.

Can Leave Be Cashed Out?

Yes, cashing out annual leave is permitted under clause 25.9 of the Award provided that all of the following is undertaken:

• An agreement to cash out annual leave must be made in writing
• The agreement must state the amount of leave to be cashed out, the payment amount and the date the payment will be made
• The club and the employee must sign the agreement (and by a parent or guardian for employees under 18 years old)
• The employee must retain at least four weeks of annual leave after cashing out
• A maximum of two weeks can be cashed out in any 12-month period
• Each cash-out arrangement requires a separate written agreement

Practical Tips for Clubs

While the Award sets out clear rules, effective management of excessive leave accruals is ultimately about early planning and clear communication. Clubs should:

• Monitor leave balances regularly to avoid excessive balances
• Communicate early—employees prefer to plan their leave rather than be directed to take leave, therefore this avoids surprises and animosity
• Use quieter periods strategically for scheduling leave
• Implement an excessive leave procedure in the club’s leave policy (and ensure the club applies it)
• Keep records of all directions and agreements to ensure compliance

Where to Find More Information

For full details, refer to sub-clauses 25.5-25.7 and 25.9 of the Award on excessive leave accruals and cashing out arrangements here.

Should you have any questions, please contact the ClubsNSW Workplace Relations Team via ClubASSIST on 1300 730 001.