There are always a few employees who have a lot of leave saved up. You may be wondering whether you can direct your staff to take leave or do you have to wait until they request it? Generally, employers prefer that employees aren’t sitting in the ‘excessive leave’ category. This is because in the event of a resignation or termination, employers could be looking at a large lump sum payout figure.
Annual leave
An employer can only direct an employee to take annual leave if the employee has excess annual leave or the leave direction is over a shutdown period, for example, Christmas and New Year. You should note that this right is subject to the provisions of the Award that applies to a particular employee’s employment or the terms of the employee’s employment contract.
What constitutes excess annual leave? This will again depend on the Award and employment agreements in place. Generally speaking, an annual leave balance is considered ‘excessive’ if an employee has more than 8 weeks of leave.1
An employment contract should set out the circumstances in which an employer may direct an employee to take leave so that there is no room for dispute. If your employment contracts don’t consider this issue, you may need to look at updating them. If a registered agreement says an employee can be directed to take excess annual leave but doesn’t set out specific rules about this, then the direction must be reasonable.
Long service leave
In addition to the provisions of the relevant Award and the terms of the employee’s employment contract, entitlements to long service leave are determined under the long service leave legislation of each State and Territory. These laws ultimately govern how an employer can direct an employee to take long service leave.
For example, in South Australia, employers should grant long service leave to an employee as soon as practicable after the employee becomes entitled to the leave.2 If the parties can’t agree on when to take long service leave, an employer can direct an employee to take long service leave so long as they provide the employee with 60 days’ notice from the date from which leave is to be taken.3 In New South Wales, employers can direct an employee to take long service leave provided they give the employee 1 months’ notice (being 4 and one-third weeks).4
Employers also have to keep in mind that it’s not just permanent staff entitled to long service leave. In certain circumstances, casuals can be entitled to long service leave as well.
What if the employee has resigned and wants to take leave for the remainder of their notice period?
If both the employer and employee agree that rather than working out a notice period the departing employee will take leave, there is no issue. If, however, the employee does not want to take leave during their notice period, the employer can’t force them to, unless the employer is able to give a leave direction as discussed above, namely, in accordance with the provisions of an Award, the terms of the employee’s employment contract and the long service leave legislation of the relevant jurisdiction. Of course, the employer can choose to pay the departing employee their normal wages and ask that they don’t come into the workplace.
Employed while still on leave
Unless an employee has waived their notice period, it is crucial for employers to understand that employees are employed whilst on leave. Typically, employees will also accrue leave benefits whilst on a period of paid annual leave or paid personal/carer’s leave. However, annual leave will not accumulate on unpaid leave unless it is community service leave, or it is provided for in an Award or registered agreement.5
How we can help
If you’re an employer who is wondering if you can direct your employees to take leave or you are an employee who wishes to challenge such a direction, contact us on 1300 882 386 or email us to speak to one of our qualified and helpful people. Our team can quickly explain your rights and obligations to you and let you know what actions you can take.
The information contained in this post is current at the date of editing – 3 September 2024.
[1] https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/annual-leave#:~:text=Generally%2C%20under%20these%20new%20rules,if%20they%20are%20a%20shiftworker.
[2] Long Service Leave Act 1987 (SA) s 7(1).
[3] Long Service Leave Act 1987 (SA) s 7(3).
[4] Long Service Leave Act 1955 No 38 (NSW) s 4(a3), s 4(1).
[5] https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/annual-leave#:~:text=Annual%20leave%20continues%20to%20accumulate,an%20award%20or%20registered%20agreement.
