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When Can I Force An Employee To Take Annual Leave?

Published October 05, 2021 -
business owner confident in understanding annual leave hoarding

With the pause to international travel, the closing of state borders, and long restrictions to regional travel, excessive annual leave build-up is becoming a common worry for employers. These large unused amounts of employee annual leave can add huge financial strain onto small businesses that they cannot afford in the long run. If for instance an employee decides to quit, desiring to take annual leave as part of final payment, or they want to take their built-up holidays in one go, you can see it has the potential to leave a business owner in a significantly vulnerable position. 

“Employers should urge their staff to take time off over the next two months or risk leave accrual exploding out of control,” said Employsure employment relations specialist Joshua Paterson. 

In this post, we will be discussing whether you can force an employee to take annual leave and provide suggestions on how to handle this tricky situation.  

What is Excessive Annual Leave?

Employees are usually entitled to a minimum of 4 weeks paid annual leave per year, or 5 weeks for some shift workers. Annual Leave builds up over the year, so as more hours are worked by the employee, then more paid leave grows for them over the year. Annual leave not taken then rolls over to the next year. 

Excessive annual leave is when an employee has accrued more than 8 weeks paid leave, (or for a shift worker, they have accrued more than 10 weeks of paid annual leave). As the pandemic has restricted staff travelling, it’s made it easy for employees to unwittingly build annual leave up into unprecedented amounts, which for a small business, could become a massive liability.

Leave-related calls to Employsure’s employer advice line spiked 51% this winter compared to spring, sparking concerns employees are building huge annual leave ‘warchests’ at the expense of small business owners.

How to Discuss Forced Annual Leave

As a business owner, it’s always favourable you reach out to your employee in the first instance. Making time for a good-natured chat about the accrued leave could resolve the issue, after-all most issues can be solved with an amicable discussion. Genuinely having a desire to reach a mutual agreement together, (that’s best for both of you) is the best way to approach the tricky subject of excessively accrued annual leave. 

How Do I Force an Employee to Take Their Annual Leave?

If you find you just cannot settle on a mutual agreement, and the employee is refusing to take the built-up annual leave, then be assured there are actions you can take as an Employer. Most modern awards now provide for employers the ability to direct employees with these excessive leave balances to take annual paid leave. 

An employer may direct an employee (in writing), to take one or more periods of annual leave. Any direction under the award clause to take annual leave must adhere to these points:

  • The employer’s direction to take leave must be in writing.
  • It must not result in the employee’s remaining paid annual leave balance being at any time less than 6 weeks, (when any other paid annual leave arrangements are taken into account).
  • The employer’s direction to take leave must not provide for the employee to take any period of paid annual leave of less than 1 week.
  • It must not provide for the employee to take a period of paid annual leave beginning less than 8 weeks or more than 12 months after the notice is given.
  • It must not be inconsistent with any other leave arrangement agreed by the employer and employee.

The employee must take paid annual leave by following this direction under the award clause that is in effect.

Forcing an Employee to Use Excessive Annual Leave

So you can direct an employee who has built up excessive annual leave, (more than 8 weeks) to take their paid annual leave.  That is, if it’s directed in written form, such as an email or letter. The exact details will be dependent on their award for their particular job role. Most modern awards after 2016, have clauses for excessive annual leave. As a business owner, it’s important to handle excessive annual leave sooner rather than later, as heavily built-up leave can be a financial liability.  It can leave you short-staffed if employees decide to hand in their notice, cashing out the annual leave, or perhaps if they decide to take their leave in a long chunk, leaving you short-staffed for an elongated time. If you need advice you can trust on a specific issue, well that’s what we do best, we support business owners with their HR concerns. And remember we offer 24/7 free initial advice, so feel free to call for a chat.

Next Steps

Encouraging your employees to take long weekends off, even short mini-breaks can help your business avoid a bottle-neck of future leave requests once borders are open. This may reassure you as a business owner that financial liabilities are being reduced, and that productivity is maintained as employee mental health is boosted with well-deserved time off from work.   Remember talking to employees is the first step to finding a mutual agreement over any excessively accrued leave.

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About Employsure

Employsure is one of Australia’s largest workplace relations advisers to small- and medium-businesses, with over 30,000 clients in ANZ. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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