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2018-03-25 23:11:37How To Run Your BusinessEnglishIf you’re an employer, understanding your rights and responsibilities, and the current regulations when it comes to annual leave can be a...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2018/03/iStock-819894792.jpghttps://quickbooks.intuit.com/au/resources/how-to-run-your-business/the-lowdown-on-annual-leave-for-business-owners/Lowdown On Annual Leave For Business Owners | Quickbooks Australia

The lowdown on annual leave for business owners

2 min read

When it comes to employee annual leave entitlements, you don’t have to look far to find information about your rights and obligations. If you’re an employer, understanding your rights and responsibilities, and the current regulations, can be a little harder to navigate. Here are the basics on what you need to know.

Who is entitled to annual leave?

Businesses must pay annual leave to all full-time and part-time employees. How much you pay depends on the National Employment Standards (NES) or your employees award. The NES is the minimum annual leave an employee is entitled to, which is currently four weeks each year.

It’s possible, however, for employees to receive additional annual leave if negotiated as part of their award, enterprise agreement, or other registered agreement. For example, shift workers can get up to five weeks of annual leave, dependent upon the award for their industry and job type.

Annual leave is accrued regularly based on an employee’s ordinary hours of work. For example, if you and your employee agree to a set 40-hour work week, this will be considered their ordinary hours. If there’s no agreement in place, ordinary hours are typically 38 hours per week for a full-time employee.

Team of workers sitting around a tableWhen can employees take annual leave?

Employees can take annual leave as soon as they’ve accumulated it, but they don’t need to take it all at once. All requests for leave should be made in advance, after which you and your employee agree when, and for how long.

Typically, the process for requesting annual leave is set out in the relevant employee’s award, agreement, or contract of employment, or in your own company policy. This usually covers what happens when people have large amounts of annual leave accumulated, and whether employees can take leave in advance before they have accrued it.

It’s worth mentioning that public holidays, other paid leave such as sick leave or carers leave, community service leave and long service leave are separate to annual leave.

Are businesses allowed to direct or refuse annual leave requests?

Employers can only refuse an employee’s annual leave request if there are reasonable grounds to do so. While different states, awards, and agreements interpret this differently, it’s generally deemed unfair for an employer to consider a leave request solely based on business needs, without taking into account the circumstances of the employee.

Depending on the award or registered agreement, employers can direct employees to take annual leave in some circumstances. For example, if you’re planning to close the business over Christmas and New Year, you can direct an employee to take annual leave for the duration of the shut down. This also applies when an employee has accrued excess annual leave.

Are there penalties for non-compliance?

Penalties for non-compliance to employee leave entitlements are overseen by the Fair Work Ombudsman. When the Ombudsman’s office is contacted for assistance on disputes between employers and employees, they will start by getting information from both sides, and may conduct an enquiry.

If it’s believed a business has breached a regulation, they may receive a Letter of Caution, an Infringement Notice, a Compliance Notice, a fine, or have legal action taken against them. This is determined on a case-by-case basis and depends on the circumstances.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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