When the year draws to a close, your business may want to take a break for the holidays – this break is known as a ‘shutdown’. This guide will provide tips on how to manage your employees’ annual leave entitlements fairly, while also meeting the needs of your business.
Keep reading to learn about forced annual leave and the circumstances in which you can direct an employee to use their annual leave.
In Australia under the National Employment Standards (NES), employees usually have the right to a minimum of four weeks of paid annual leave per year (or five weeks for employees who do shift work).
Throughout the year, annual leave gradually builds up as employees work more hours. Accumulation of annual leave starts from the first day of employment, including the probation period.
Here are some common annual leave calculations:
Annual leave will also accumulate while your employee is on paid leave, jury duty and long service leave. However, if they take unpaid annual leave, unpaid sick leave or unpaid parental leave, then leave does not build up.
Any unused leave generally carries over into the following year. When an employee has accumulated more than eight weeks of paid leave (or ten weeks for shift workers), it is typically considered excessive.
In the lead-up to Christmas, a commonly-asked question is ‘Can I be forced to take annual leave?’ This video from Fair work provides useful information:
As an employer, there are only certain circumstances where you have the authority to request an employee take their annual leave. These circumstances are:
If you want your employees to take forced annual leave over Christmas in Australia, you need to be mindful of the following NES regulations:
More information can be found in this guide from the Australian Government: Direction to take annual leave during a shutdown.
Towards the end of the year, it’s common for employees to ask: can you be forced to take annual leave? In certain circumstances, it is possible for an employee to refuse to take forced annual leave at Christmas. This is usually when the employer has failed to meet the requirements outlined in the section above. If these requirements are not met, the employee may have grounds to refuse the request.
Additionally, any directive must align with existing arrangements between the employee and employer, and it should not conflict with any terms in the applicable award or agreement. If an employer’s request is inconsistent with these conditions, the employee can potentially decline it. However, if all conditions are satisfied under the Fair Work Act and relevant awards, employees may find it challenging to refuse the request without a compelling reason.
During forced leave, an employee’s leave entitlements – such as accrued annual leave – are typically reduced by the amount taken during the directed leave period. For instance, if an employee is required to take two weeks of leave, their annual leave balance decreases accordingly.
However, other entitlements – like long service leave or personal leave – are not affected by the use of annual leave unless they are also taken during that period. Employees continue to accrue leave entitlements in line with their regular working hours, meaning annual, personal, and other types of leave continue to build up even while on forced leave.
While you do have the authority to require an employee to take annual leave in some situations, it's important to handle this matter with sensitivity and thoughtfulness. Here’s how to broach the topic of forced annual leave:
Before forcing annual leave, it's good to have a conversation with the employee. Discuss their excessive leave balance and try to understand the reasons behind it. Often, a friendly and open discussion can lead to mutual understanding and resolution.
If the conversation doesn't result in a satisfactory outcome and you need to proceed with enforcing annual leave, make sure to provide written instructions. This notice should clearly state the period during which the employee is required to take their leave.
Ensure that any directive regarding annual leave aligns with the rules laid out by Fair Work. This includes adhering to the required notice period and ensuring that the duration of the holiday aligns.
The notice should state when the employee's leave should start. For example, within a minimum of eight weeks and a maximum of twelve months after the notice is provided.
Make sure that the instructions provided do not conflict with any other previously agreed-upon leave arrangements between you and your employee.
Handling employee leave can be pretty overwhelming, especially during shutdowns and when dealing with excessive leave.
The good news is that QuickBooks cloud payroll software provides tools to help your business manage employee leave. Let's explore how QuickBooks can assist you:
On QuickBooks, you can add leave in advance from the Employee homepage:
For more information on setting up leave on QuickBooks, view our support page on managing leave.
Navigating forced annual leave properly helps your business operations continue to run smoothly, even during shutdowns. Always approach the matter with open communication and fairness to maintain a collaborative employee-employer relationship.
Can an employee be forced to take annual leave?’ Check the annual leave section of the Fair Work website for up-to-date information, or read our guides to floating holiday and unlimited annual leave.
You can use QuickBooks Payroll to manage and create leave requests for your employees. Sign up for QuickBooks Online with a free 30-day trial today.
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