Leave Hoarding: The new dilemma facing Aussie employers as advice calls surge 51%

Published September 08, 2021 -
Leave Hoarding

COVID lockdowns and travel restrictions are causing a new workplace headache for Australian employers, as staff accrue vast amounts of unused annual leave.

A pause to international travel, closed state borders and even restrictions to regional travel has seen the average leave an employee has banked up grow exponentially over the past 18 months.

Leave related calls to Employsure’s employer advice line spiked 51% over July and August when compared with May and June, sparking concerns employees are building huge annual leave ‘warchests’ at the expense of small business owners.

When and how to direct employees to take their annual leave has topped the list of leave-related concerns amongst employers over the past two months.

The annual leave entitlement accrues from year to year, but with COVID putting holiday plans on hold for many, staff are opting to hang on to their leave. This can represent an additional financial strain many small businesses cannot afford where leave balances add to a business’s liabilities, or annual leave is paid out at a higher pay rate than when the employee first accrued the leave.

“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.

“Under most modern awards, an employee is considered to have an excessive amount of leave accrued if they have more than eight weeks of paid annual leave accumulated, or more than 10 weeks for shift workers.

“For award-covered employees with an excessive amount of leave accrued, the employer should try to reach an agreement with an employee to minimise it. If that does not work and the award allows it, the employer can direct the employee in writing to take paid annual leave. Usually under this type of direction, the employee’s leave must not be less than one week, must be taken no less than eight weeks or more than 12 months after they are directed to, and it must not be inconsistent with any prior leave arrangement.

“The rules applicable to agreement-covered employees will depend on what their agreement says. For award and agreement free employees, employers can direct them to take annual leave where it is reasonable to do so.”

Encouraging employees:

Employers should regularly encourage ‘mini breaks’ for employees to help avoid burnout and a bottleneck of leave requests. Many employees may not have taken a holiday since the pandemic began, and as such should be urged to take at least a few days off to rejuvenate themselves mentally.

Employers can remind employees they are still entitled to an extension in annual leave flexibility under some awards. Until the 31st of December, employers can agree for staff to take their annual leave at half pay and double their time off work. In other words, the employee gets paid one week of their annual leave entitlement over a fortnight.

Employers worried about employees accruing excessive amounts of leave should encourage staff to take the leave at half pay.

Monitoring leave:

To assist with planning, people management software such as BrightHR has become a must have for employers. This software allows employers to manage leave requests and balances from anywhere, anytime, and record all employee information such as personal details, emergency contacts, and COVID-19 vaccination status.

By using digital software to consolidate all leave requests in one place, businesses can identify critical periods in the calendar where all hands are needed on deck, as well as the quieter times of year where employees should be encouraged to use their leave.

“Using the correct software can give both employers and employees peace of mind knowing all obligations under the Fair Work Act are being met,” continued Mr Paterson.

“Managing leave correctly can have a positive impact on the mental and physical health of employers and their staff, and employers should plan ahead now to stop excessive amounts of leave from building before Australia fully reopens.”


Further enquiries:

Matthew Bridges

[email protected]

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