Most modern awards allow employees to request cashing out annual leave from their employer. Under this clause, an Employee may cash out a particular amount of accrued Annual Leave providing that certain conditions are met.  

Employees can request for their Annual Leave to be cashed out, however, Employers cannot direct Employees to cash out Annual Leave. The Cash-Out Payment of Annual Leave must be paid at the same rate and conditions as payments on Annual Leave taken. Therefore, both Leave Loading and Superannuation apply to this payment. However, Annual Leave Cash Out periods do not accrue Annual or Personal Leave.

Set up Annual Leave Cash Out

1. Click on the Business Dashboard icon  > Payroll Settings > Pay Categories
   
   è The Pay Categories screen opens
   
   
   
   
2. Make sure the Pay Categories option is set to Your pay categories, then click on [Add]
   
   è The New Pay Category screen opens
   
   
   
   
3. In the Pay category name type: Annual Leave Cash Out and click on [Save]
   Note: some Awards also allow cashing out of Personal Leave. Furthermore, some States allow cashing out of Long Service Leave. If you wish to set Personal or Long Service Leave Cash Out, ensure you review the correct ruling of either your classified Industry Award (Personal Leave) or the Long Service Leave Act of the State where the employee resides.
   
   è The Annual Leave Cash Out Pay Category screen opens
   
   
   
   
4. Select/Enter the following details:
   • Units > Select: Fixed
   • Super Rate > Select the correct Superannuation Statutory rate for the relevant Financial Year
   • PAYG exempt > Do not select this option
   • Payroll tax exempt > Do not select this option
   • Payment classification > Confirm: Default
   • Rate precision > Confirm: 5 decimal places
5. Click on [Save]