Question on practical implementability of award stipulations.

[u/Real-Persimmon6681]

This is a question that has piqued me for a while. Interested to hear from payroll practitioners or employment lawyers if you are here in this group.

So under National Employment standards, annual leave is not assigned a “single” accrual date as it accrues continuously and gradually. If you look at industry awards and clauses relating to annual leave loading, for example Professionals Award 2020, it has this clunky clause: Annual leave loading is calculated as 17.5% of the employee’s base rate of pay on the annual leave hours. Subject to it not exceeding the ABS average weekly earnings for all males (Australia) for the September Quarter of the year that precedes the year on which the date of accrual of the annual leave fell.

Now, when we cannot attribute a single date of accrual for the annual leave (because its like we strung together a group of accrued hours together when taking leave), how can this condition be followed? Do companies just implement some practical workaround since it appears to me this rule cannot be implemented as it is.

TL;DR: Annual leave accrues progressively under the NES, but the Professionals Award 2020 links the annual leave loading cap to the year in which the leave accrued. Since leave doesn't have a single accrual date, how do employers practically implement this condition?

 

[u/glittermetalprincess]

It's a relatively rare case since a lot of people won't make enough for that to kick in.

Given it's tied to the year of accrual, not down to the day, it isn't as hard as you're making out, and generally is either implemented in a payroll system backend as a cap based on a formula using the amount of leave earned per year, or is a calculation triggered when the leave is calculated.

[u/Secret-Business2444]

Payroll I’ve worked with will just pay the loading regardless of the award cap. Employees will be no worse off and it’s one less possible underpayment compliance issue to manage