When it comes to employee entitlements, there can be some confusion around how it can be granted and whether the circumstances allow it. 

All Australian employees (apart from casual employees) are entitled to annual leave. But what are the rules around it?

In this article, we’ll go through the details around annual leave and whether employees can be forced to take annual leave. 

What Is Annual Leave?

Annual leave is when employees can take time off from work while still being paid. For example, employees may have a family trip planned for 1 week. They have the right to take time off from work for this time by requesting annual leave. 

The employer will need to approve this leave. 

How Long Is Annual Leave In Australia?

In Australia, all employees except for casual employees are entitled to at least 4 weeks of annual leave. 

Fair Work Australia has written more about annual leave, so it’s a good idea to read into your obligations around leave entitlements to avoid consequences for non-compliance. 

When Can I Take Annual Leave?

The time that you can take annual leave is not actually specified. So, you are free to take annual leave as soon as it is accrued. 

However, this is also something that should be raised with employers. The rules around leave and the employer’s preference around the process should be specified in the Employment Contract

Can You Lose Annual Leave?

Employees can’t ‘lose’ annual leave. In other words, it cannot be refused unreasonably. 

Employees are entitled to annual leave and must seek their employer’s permission. If you would like to refuse or decline an employee’s request to take annual leave, you must provide a legitimate and good reason. 

Can I Force My Employees To Take Annual Leave?

As an employer, it is not in your best interests to have staff accrue too much annual leave. This is for several reasons:

  • Financial: Unused annual leave is a financial liability. Should the worker leave their job, you will have to pay this out to them. 
  • Managerial: There is the danger your employee will want to take all of their leave at once, making it difficult to cover their position over a long time period. Or maybe several employees will want to take leave at the same time, making it operationally difficult for your business.
  • Workplace Health & Safety: You do not want your staff to suffer burn out, or to become unwell from working too long without a break. Going too long without a break can also lead to decreased efficiency and morale in the workplace. 

However, from an employee’s perspective, they may want to save up their annual leave for a long holiday, or for a time when their children or spouse are on holidays too. Employees may also prefer to be paid out the annual leave when they leave the business.

Technically, employees can take as much or as little leave as they like at once. And, of course, best practice is always to negotiate leave with staff and let them know the operational requirements of your business well in advance. This allows your staff to plan their leave, and they can be given notice to voluntarily take some leave if you notice their balance creeping up. 

There are only two circumstances in which employers can force their employees to take leave: 

  • When an employee has accrued ‘excess leave’
  • If the business is shut over a holiday period. 

What Is ‘Excess Leave’? 

Excess leave should be addressed in the employee’s registered agreement. A registered agreement may define exactly how much leave is excess, or it may be silent on how much leave is excess. If the registered agreement does not define the amount, then forcing an employee to take leave because they have accrued excess leave must be a ‘reasonable direction’

A ‘reasonable direction’ should take into account:

  • The operational requirements of the business and the needs of the employee
  • Any predetermined arrangements with the staff member
  • The normal arrangements of the entity
  • How much notice was given for leave

Getting Staff To Take Leave During A Business Shut Down

A business shut down is a temporary close of business at certain times of the year (for instance, at Easter or over the Christmas holidays). A lot of businesses have stood down employees because of COVID-19 shut downs, however this is different. We’ve written more about directing employees to take leave during COVID-19 here.

Again, to force an employee to take leave during a business shut down, it must be allowed in the employee’s registered agreement or modern award. 

The Takeaway

Forcing employees to take leave should always be a last resort, as you want to maintain a good relationship with your staff, and this could lead to resentment. Being open with your employees about how accrued leave will affect your operational needs, and what needs to be done, will help place you both on the same page. 
Though forced leave is possible, it should be a last resort. If you have any employment law queries, feel free to contact Sprintlaw on 1800 730 617 or at team@sprintlaw.com.au.

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