Whether it’s extending a long weekend to relax on a beach or spending a month visiting dream destinations around the world, everyone looks forward to taking a much-needed break.
But what happens if there’s an unbelievable travel deal to those dream destinations and your employee pre-books it now and applies for annual leave later?
If the pre-booked holiday isn’t for several months and the dates don’t conflict with any known busy periods or other operational requirements, approval may not be an issue. However, if the notice is short, conflicts with the approved leave of other employees, or falls during a particularly busy period, you may have to make the hard decision of denying their leave application.
When can I refuse an annual leave request?
Many employees are surprised to learn that, as an employer, you can in certain circumstances refuse annual leave requests. Under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth), an employer must not unreasonably refuse an employee’s request to take paid annual leave. Whether a refusal is reasonable will depend on the circumstances.
It is good practice to keep records where you refuse an annual leave request, including the reasons for the decision and how it was communicated to the employee. This can help demonstrate that the refusal was reasonable if the decision is later challenged.
If you’re interviewing a potential new employee, ask if they have any pre-booked holidays and the intended travel dates. If they do, you will be able to successfully manage their onboarding and workload before they go on leave and while they are away.
Some reasons why it may be reasonable to refuse annual leave requests include:
Operational business needs
If approving leave would create significant staffing shortages or disrupt business operations, this may support a reasonable refusal depending on the circumstances. This commonly occurs in industries that experience seasonal peaks, such as retail and e-commerce, hospitality, tourism, farming and agriculture during harvesting and picking season.
Insufficient notice
Many workplaces have a policy where requests for leave must be submitted with a minimum period of advance notice. Depending on the amount of time off and the employee’s position within the business, this could be a couple of weeks if the request is only for a few days, or longer if the leave is extensive.
However, a workplace policy does not automatically determine whether refusing a request is reasonable. Each request should be considered on its individual circumstances. A leave request made at short notice may be refused where, for example, there is insufficient time to make appropriate staffing arrangements.
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Critical projects or deadlines
If the employee is in a management or project lead role and their position is vital to the completion and presentation of a major project, meeting agreed customer obligations, or achieving critical deadlines, this may be a relevant factor when determining whether it is reasonable to refuse their request.
Too many employees already on leave
Sometimes you may have multiple employees already on leave, or other employees may have submitted requests for the same period that have already been approved. You may be able to refuse additional leave applications if approval would mean your business is understaffed or unable to operate efficiently, safely, or serve customers effectively.
Annual leave and school holidays
School holidays can be particularly challenging as employees may want to take annual leave at the same time to enjoy a family holiday. If too many people are away, the result is often understaffing. This can lead to increased stress and workloads for managers and remaining employees.
To prepare for the increase in leave requests around school holidays, it’s helpful to mark your calendar with the relevant school holiday dates and encourage employees to submit requests early.
Having a clear and consistently applied process for managing competing leave requests, such as considering requests in the order they are received, can also help manage popular periods.
Considering alternatives
If an annual leave request is not viable for the continued operation of your business, rather than simply refusing it, explore whether there is a possible compromise that is mutually suitable for your employee and business, such as alternative travel dates. This can prevent potential conflict and promote a fair decision-making process.
Training team members in other areas of your business and planning workloads around when employees are on leave can help ensure there is minimal disruption to operations, while easing the workload of remaining employees and maintaining productivity.
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When refusal may be unreasonable
Full-time and part-time employees have a legal entitlement to paid annual leave, and employers must not unreasonably refuse a request to take annual leave.
A refusal may be unreasonable where there is no genuine operational basis for the decision, or where relevant circumstances have not been properly considered. Employers should also ensure leave decisions are made fairly, consistently and without unlawful discrimination.
Directing employees to take annual leave
Many businesses choose to close over Christmas and New Year. Whether you can direct employees to take annual leave during a shutdown depends on the rules that apply to them.
For employees covered by a modern award or enterprise agreement, check whether it allows employees to be directed to take annual leave during a shutdown and comply with any applicable requirements, including notice requirements. For employees who are not covered by an award or enterprise agreement, an employer can require them to take paid annual leave if the requirement is reasonable.
The required notice period can differ depending on the applicable award or enterprise agreement, so employers should check the instrument covering their employees before announcing a shutdown.
For many industries, such as manufacturing, a shutdown period also provides an opportunity to complete annual maintenance tasks or upgrades.
By communicating early and planning leave effectively, both you and your employees can avoid disputes and maintain a productive workplace.
Excessive amounts of annual leave
Excessive amounts of annual leave can be costly for businesses. In certain circumstances, an employer may be able to direct an employee with excessive accrued annual leave to take leave. The applicable modern award or enterprise agreement should be checked before issuing a direction, as it may contain specific rules about when and how a direction can be made.
Under most modern awards, annual leave is considered excessive where an employee has accrued more than:
- eight weeks’ paid annual leave; or
- 10 weeks’ paid annual leave for a shiftworker.
Under most awards, if the employer and employee have been unable to agree on when the leave will be taken, an employer may direct the employee to take excessive annual leave subject to specified requirements. These generally include giving the employee written notice at least eight weeks, but no more than 12 months, before the leave starts. The direction must also generally be for at least one week of leave and must not result in the employee having less than six weeks of accrued annual leave remaining. Employers should check the applicable award because requirements can differ.
Annual leave is one of the most valued workplace entitlements. Full-time and part-time employees are entitled to paid annual leave, which starts to accrue from their first day of employment. Encouraging your employees to take time off throughout the year will enable them to relax and recharge. It can also reduce the challenge of juggling multiple leave requests for the same period and disappointing employees if their request is denied.
Call Peninsula 24/7 for expert advice on annual leave entitlements and your employer obligations.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.
