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.

About Sprintlaw

Sprintlaw is a new type of law firm that operates completely online and on a fixed-fee basis. We’re on a mission to make quality legal services faster, simpler and more affordable for small business owners and entrepreneurs.

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