Managing annual leave isn’t just about approving time off; it requires balancing operational needs with strict legal obligations and applicable awards or agreements.
Here, our Employee Relations Helpline team answers common employer questions to help you navigate leave requests, excessive balances, shutdowns and cashing out arrangements with confidence.
As a CCIWA Member, you get unlimited access to our Employee Relations Helpline. This includes prompt advice on your circumstances, consulting, documents such as kits and guides and up-to-date industrial relations information. Contact our Employee Relations Helpline on 08 9365 7660 or email [email protected].
Q: What rules apply when an employee requests annual leave?
A: Annual leave may be taken at a time agreed between the employer and the employee, and there is no set minimum or maximum amount of leave an employer may approve at one time. While employers retain the discretion to approve or decline leave requests, they must not unreasonably refuse an employee’s request to take paid annual leave.
Factors that may be relevant when considering a refusal include:
- Amount of leave being requested
- Business’ ability to maintain adequate operational coverage during the proposed leave period
- Whether the employee has complied with the organisation’s notice requirements as outlined in the employer’s leave policy
Q: What can employers do if an employee has accrued an excessive annual leave balance but refuses to take time off?
A: The appropriate approach will depend on whether they are covered by an enterprise agreement or an award – or neither. Where an award or enterprise agreement applies, the employer must follow the specific rules set out in that industrial instrument regarding directing employees to take excess leave.
For employees who are not covered by an award or enterprise agreement, an employer cannot force them to take annual leave. In these situations, it is important to engage in a discussion with the employee about their leave balance and work together to identify ways to manage it. This may include:
- Reminding staff of their entitlements
- Encouraging them to take leave for their wellness
- Considering options such as cashing out leave where permitted
Q: If annual leave falls over a public holiday, should employers deduct leave for that day, and does it differ for part-time or full-time employees?
A: If an employee is on annual leave and a public holiday occurs during that time, the public holiday is not deducted from their annual leave balance – this is the same for full-time and part-time employees.
The public holiday is treated as a normal paid public holiday, not a leave day.
Q: Can an employer direct employees to take annual leave during a shutdown, and what notice requirements apply?
A: An employee can be required to take annual leave during a shutdown period only if their applicable award or enterprise agreement permits it and they have complied with the relevant notice requirements stipulated under the industrial instrument.
Where an employee is not covered by an award or enterprise agreement, an employer may direct them to take annual leave during a shutdown period, provided the direction is reasonable and they have been notified in advance.
Q: Can employers decline an employee’s request to cash out annual leave, and what conditions must be met to allow it?
A: As cashing out annual leave is only permitted when certain conditions are met, an employer may decline an employee’s request if those requirements are not satisfied.
Both the employer and employee must agree to the cashout arrangement, and the agreement must not reduce the employee’s remaining annual leave balance to less than four weeks. Each cashout must be documented in a separate written agreement, and the employee must be paid the full amount they would have received had they taken the leave.
It is also important to review the applicable award or enterprise agreement to determine whether it sets any conditions for cashing out annual leave, or restrictions on how much annual leave can be cashed out per year.
Q: When does annual leave accrue and when does annual leave not accrue?
A: Annual leave begins accruing from an employee’s first day of work. It accrues gradually throughout the year based on the employee’s ordinary hours of work, and any unused leave continues to roll over from year to year.
Annual leave continues to accrue while an employee is on certain types of paid leave, including paid annual leave, paid sick or carer’s leave, paid family and domestic violence leave, employer provided paid parental leave, paid community service leave, and long service leave. However, annual leave does not accrue during periods of unpaid leave, such as unpaid sick or carer’s leave, unpaid parental leave and periods of leave without pay.
Q: Can employers change or cancel previously approved annual leave due to operational needs, and what risks should be considered before doing so?
A: An employer generally cannot unilaterally change or cancel previously approved annual leave. If operational needs arise and a variation is required, the employer should consult with the employee and try to reach a mutual agreement about any change. Unilaterally withdrawing approval or penalising an employee for taking their approved leave can create significant legal risks.
Disciplining an employee for taking annual leave may constitute adverse action under the general protections’ provisions, as it interferes with the employee’s right to use their workplace entitlements. Employers should carefully assess both the legal and relational implications before seeking to alter any approved leave arrangements.
For general employee advice and guidance, contact CCIWA’s Employee Relations Helpline on 08 9365 7660 or email [email protected].
