Annual leave is an entitlement for employees which is to be taken regularly to ensure that they have appropriate downtime and can relax. Not taking accrued annual leave can be hazardous to the health and safety of employees.
Excessive accrued annual leave balances can represent a significant financial liability for employers.
Some general options for managing employees with excessive annual leave balances include:
Shutdown
Depending on business requirements, employers may shut down during quiet periods, for example over Christmas/New Year, and require their staff to take annual leave during this time. There are rules and conditions around this so make sure you seek professional advice. If your employees are covered by an award or an agreement, you will need to check the relevant provisions. Read about temporary workplace shutdowns in modern awards >
Direction to take leave
If an employee has accrued an excessive amount of leave, it is considered “reasonable” to direct them to take annual leave. While the Fair Work Act doesn’t define how much leave is “excessive”, greater than four weeks can be used as a general guide (this is used in many agreements and policies). Again, if your employees are covered by an award or an agreement, you will need to check the relevant provisions and seek professional advice.
More Alternatives
Other options for managing employees with excessive annual leave balances may include cashing out of leave or requiring employees to use leave within a certain period, but it's crucial to seek professional advice before proceeding.
Remidner: Accrued leave can’t be lost just because an employee hasn’t used it within a stipulated time.
It is important for employers to be familiar with the rules around annual leave entitlements and, ideally, be able to come to an agreement with employees around managing leave balances. For bespoke assistance or more information, please contact us today.
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