The Do's and Don'ts of Managing Annual Leave

Managing staff involves more than just overseeing work; it also includes managing holidays and annual leave effectively. As an employer, it's your responsibility to maintain accurate, up-to-date records of your employees' time off. Here are some key points to remember:

1. Annual leave entitlement doesn't expire

Employees are entitled to take their leave whenever they choose and their annual leave never expires. Employees can choose to cash in one week of leave per year (if your business chooses to do so) but this must be approved by you.

2. You can’t unreasonably refuse a leave request

When considering leave requests, businesses must act reasonably and cannot refuse annual leave requests without a valid reason.

3. You can reject requests for unpaid leave or for using leave in advance.

If your employee hasn’t accrued enough annual leave entitlement to cover their upcoming leave request/holiday, you can reject their leave request. Similarly, you can reject a request for unpaid leave.

4. You can’t force an employee to take annual leave, except during a shutdown

A business cannot force an employee to take their annual leave before it’s due, except during a company-wide shutdown. For most businesses, this type of leave typically happens during late December – early January.

5. You can require an employee to take time off, but only in certain situations

If you and your employee(s) can’t agree on when they should take leave, you can require an employee to take time off if 14 days' notice must be given.

To manage leave efficiently, consider implementing a system for tracking holidays. An annual leave planner—whether digital or a traditional wall calendar—can help you monitor leave taken and planned by your team. Ensure that Employment Agreements clearly outline all leave entitlements and any specific conditions. Additionally, provide new employees with a handbook detailing their leave rights and benefits.

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The Christmas season can create payroll challenges, but understanding the rules can help you stay compliant. Annual Leave: By law, employees are entitled to four weeks of paid leave per year. To avoid last-minute staffing problems, set clear deadlines for leave requests. Holiday Pay : Employees must be paid for public holidays that fall on their regular workdays. Keeping up-to-date employee records and rosters ensures accurate payment. Christmas Closures : Plan ahead for any business shutdowns. You must provide at least 14 days' notice before a closure. If an employee doesn’t have enough leave, they must be paid 8% of their gross earnings since their start date or their last leave entitlement, minus any leave paid in advance if agreed upon. Cashing Up Leave : If it’s part of the agreement or you choose to allow it, employees may cash up to one week of annual leave each year. However, you cannot pressure them into doing so. Casual Workers : Casual employees should receive an additional 8% on top of their earnings instead of accruing leave, and this must be clearly shown on their pay slips. With careful planning, you can keep payroll running smoothly, allowing both you and your team to enjoy a stress-free holiday season. Feel free to reach out if you need any assistance or clarification.

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