What to Do if Employees Have Too Much Leave

Table of Contents

Share at:

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:

  1. An employee has accrued more than 8 weeks of paid annual leave; or
  2. 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.

Moving forward

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.

Share at:

Simplify creating legal documents today

Browse through Lawpath's AI tools which can be used to draft, review and refine legal documents today!

Related Articles

Sydney office towers against a blue sky

LLC in Australia? The Equivalent Is a Pty Ltd

Australia has no LLC. The equivalent is a Pty Ltd, which gives you limited liability but is taxed as a separate company at 25% or 30%.
Wooden toolbox full of hand tools on a timber bench

How to Start a Handyman Business in Australia

Many handymen start as a sole trader with an ABN. Whether you need a licence depends on your state and the job value, and public liability cover is a must.
Empty bright Pilates studio with rows of wooden reformers

How to Start a Pilates Studio in Australia

Many Pilates studios open as a Pty Ltd. Before your first class you need an ABN, a commercial lease, instructor agreements, insurance and signed waivers.

How to Start an Investment Partnership

Investment partnerships differ from common business structures, and it is important to understand what you are entering into by choosing such a structure for your business.

Should You Use A Mutual or One-Way NDA? (2026 Update)

As a business owner, it's important to protect your confidential information in every context. Find out the difference between one way and mutual NDAs here.

Profit Sharing Agreement: What is it and When Do I Need One?

Do you need a profit sharing agreement? Our article will take you through what this agreement is and when it should be used.