When employees have too annual much leave, this poses a problem to both parties. With the introduction of international and interstate travel restrictions due to COVID-19, reluctancy to take annual leave has increased. Due to the uncertainty of when we can travel again, many employees seem to be reserving their leave for when “normality” resumes, whenever that may be.
Reasons why employees don’t take leave
To start, it’s important to pin down the reason your employee isn’t taking annual leave. Understaffed businesses also have a tendency to rely on existing employees more, which also causes excessive accrual of annual leave. Not to mention, fears of redundancy and dismissal play a huge role in this. Employees may feel the need to overwork in order to avoid losing their job or position, with the protection of job security being a greater concern than ever. Whatever the reason is, there’s no denying how problematic this is for businesses. After narrowing down the reason, it’s important to know what steps you can take to mitigate the situation.
What does the law say about excessive annual leave?
Before deciding to escalate the situation, you want to avoid creating conflict between you and your employee. So knowing the law around this is crucial. All employees are covered by National Employment Standards (NES) under the Fair Work Act 2009 (Cth), except for casual workers. According to the NES, the minimum annual leave entitlement is 4 weeks, or 5 weeks for some shift workers. This depends on an employee’s ordinary work hours and accrues progressively. Excessive annual leave, on the other hand, exceeds this quantity and here’s when it gets problematic. It’s defined by the following factors:
- An employee has accrued more than 8 weeks of paid annual leave; or
- A shift worker has accrued more than 10 weeks of paid annual leave.
Can I make employees take annual leave?
Under the Fair Work legislation, employers can require employees to take annual leave if certain conditions are met. The specific conditions that enable an employer to direct annual leave are when an award or registered agreement allows for it and the requirement to take leave is reasonable, according to section 94(5) of the Fair Work Act. Employers don’t have the right to send employees on leave if such conditions aren’t met. A more recent development in this area is the introduction of ‘annual leave in advance’ under the legislation. An employee has the right to take annual leave only if:
- There’s a written agreement between the employer and employee addressed to the employer about taking a period of leave in advance;
- The written agreement clearly states the duration of leave: when it will commence and end; and
- Both the employer and employee sign the agreement, or in special circumstances, a parent/guardian may sign if the employee is under 18 years of age.
Cashing out leave: A short-term fix
Another option employers have is cashing out annual leave where it’s permitted. Some employers will prefer this over taking the leave. However, this is a short-term fix because people are still not actually taking time off from work and the cycle of accruing leave continues. It can have long-term detrimental effects on employees’ heath and wellbeing. So, it’s important to keep in mind that this isn’t legal for every employee. This is only legal if you have a registered agreement with the Fair Work Commission. When cashing out is permitted, employees can’t be forced or pressured to agree to the arrangement.
Before commencing any action regarding excessive leave, doing your research as an employer is critical. You don’t want to create conflict or force your employees into an arrangement that isn’t reasonable. Facilitating an open conversation with your employees and coming to an agreement that’s both fair and legal should be a priority. Other long-term fixes you may wish to implement can include promoting a healthy work-life balance in your workplace that will encourage employees to use their annual leave. Improving the way you manage employee annual leave balances with a greater focus on why employees aren’t taking leave, may produce more positive outcomes. You can also host annual leave planning workshops to provide your employees with further guidance and clarify any questions they have. If you would like further assistance on annual leave agreements, you can speak to an employment lawyer who will get the job done.