Can Employees Be Forced to Take Annual Leave?

COVID-19 has led to many businesses asking their employees to take annual leave and reduce hours during the slowdown in business activity. This may also occur in other slow periods such as the Christmas holidays and when employees accrue large amounts of leave. Directions to take paid leave can be frustrating, as you may have plans to use the time for a holiday down the track. But can your employer force you to take time off?

What is annual leave?

Under the Federal Government’s National Employment Standards (NES), employees other than casual employees have the right to four weeks paid annual leave (for shift workers, see here). Leave is paid based upon an employees’ ordinary hours. For example;

• A employee who works 20 hours per week (part-time) will accrue 80 hours of leave annually.
• An employee who works 38 hours (full time) per week will accrue 152 hours of leave annually.

Annual leave also accumulates when on paid sick leave, jury duty, and long service leave. Employees may wish to exercise this entitlement at convenient times such as holidays or birthdays. The process for taking annual leave is outlined in the agreement between employer and employee.

Can your employer force you to take it?

There are certain circumstances in which businesses may direct their employees to take annual leave. Businesses can direct their employees to do this during business closures or slow periods such as Christmas and New Year and where they have accrued an excess amount of leave. The NES sets an excessive amount of leave as more than 8 weeks.

Business powers to force employees to take annual leave depends upon what particular registered agreement or award exists between the employee and the employer. For example, The Clerks – Private Sector Award 2020 allows employers to direct staff to take annual leave during closedown periods with four weeks’ notice. This award also gives employers the right to negotiate with employees on how to reduce their leave entitlements when in excess of 8 weeks. If negotiations are unsuccessful, employers have the right under the award to issue a direction to employees, forcing them to take one or more periods of annual leave. The requirements of such a direction under the National Employment Standards are:

• It needs to be in writing
• Leave balance must be more than 6 weeks
• Must not require the employee to take less than one week
• Leave must be 8 weeks after and sooner than 12 months from the request
• Must not be inconsistent with other arrangements between the employer/employee

Specific entitlements vary depending upon the applicable award or enterprise agreement. Employees must comply with directions provided they meet the specified standards of the relevant agreement.

What if there’s no registered agreement?

If there is no applicable registered agreement, the employee may be directed to take annual leave where reasonable under the Fair Work Act. A reasonable circumstance may be a business shut-down due to COVID-19. Still unsure about whether your employer can direct you to take annual leave? Visit Fair Work Australia to determine what circumstances apply to your terms of employment.

This article applies to employees other than casual employees. For more information on casual employment, visit here.