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When Can I Force an Employee to Take Annual Leave?

Annual Leave

20 Nov 2023 (Last updated 3 Sept 2025)

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Large unused amounts of employee annual leave can add huge financial strain onto small businesses that they cannot afford in the long run. If for instance an employee decides to quit, desiring to take annual leave as part of final payment, or they want to take their built-up holidays in one go, you can see it has the potential to leave a business owner in a significantly vulnerable position. 

What is excessive annual leave?

Employees are usually entitled to a minimum of 4 weeks paid annual leave per year, or 5 weeks for some shift workers. Annual Leave builds up over the year, so as more hours are worked by the employee, then more paid leave grows for them over the year. Leave not taken then rolls over to the next year. 

Excessive annual leave is when an employee has accrued more than 8 weeks paid leave, (or for a shift worker, they have accrued more than 10 weeks of paid annual leave).

Leave-related calls to Peninsula’s advice line are common, sparking concerns about employees taking unexpected annual leave or accruing leave to take it at busy periods, causing small businesses to scramble for staff. This is where having a leave policy comes in handy.

Can I force an employee to take annual leave?

An employer can force an employee to take annual leave in certain situations such as:

  • the business is closed during the Christmas and New Year period

  • an employee has accumulated excess annual leave

The rule about when and if an employer can direct an employee to take annual leave is set out in Awards and agreements.

As a business owner, it’s always favourable you reach out to your employee in the first instance. Making time for a good-natured chat about the accrued leave could resolve the issue, after-all most issues can be solved with an amicable discussion. Genuinely having a desire to reach a mutual agreement together, (that’s best for both of you) is the best way to approach the tricky subject of excessive annual leave. 

How do I force an employee to take their annual leave?

If you find you just cannot settle on a mutual agreement, and the employee is refusing to take the built-up annual leave, then there are actions you can take as an Employer. Most modern awards provide employers with the ability to direct employees with these excessive leave balances to take annual paid leave. 

An employer may direct an employee (in writing), to take one or more periods of annual leave. Any direction under the award clause to take annual leave must adhere to these points:

  • The employer’s direction to take leave must be in writing.

  • It must not result in the employee’s remaining paid annual leave balance being at any time less than 6 weeks, (when any other paid annual leave arrangements are taken into account).

  • The employer’s direction to take leave must not provide for the employee to take any period of paid annual leave of less than 1 week.

  • It must not provide for the employee to take a period of paid annual leave beginning less than 8 weeks or more than 12 months after the notice is given.

  • It must not be inconsistent with any other leave arrangement agreed by the employer and employee.

The employee must take paid annual leave by following this direction under the award clause that is in effect.

Forcing an employee to use excessive annual leave

You can direct an employee who has built up excessive annual leave, (more than 8 weeks) to take their paid annual leave.  That is, if it’s directed in written form, such as an email or letter. The exact details will be dependent on their award for their particular job role. Most modern awards after 2016, have clauses for excessive annual leave. As a business owner, it’s important to handle excessive annual leave sooner rather than later, as heavily built-up leave can be a financial liability.  It can leave you short-staffed if employees decide to hand in their notice, cashing out the annual leave, or perhaps if they decide to take their leave in a long chunk, leaving you short-staffed for an elongated time.

Next steps

Encouraging your employees to take long weekends off, even short mini breaks can help your business avoid a bottleneck of future leave requests once peak season arrives. This may reassure you as a business owner that financial liabilities are being reduced, and that productivity is maintained as employee mental health is boosted with well-deserved time off from work. Remember talking to employees is the first step to finding a mutual agreement over any excessively accrued leave or excessive annual leave.

How can Peninsula help you?

We have worked with thousands of businesses across Australia and New Zealand in employment relations and work health and safety. We understand the challenges small business owners face regularly. Call our 24/7 Advice Line on 1300651415 today to get all your tricky questions answered.

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Annual Leave

The History of Annual Leave

All employers in Australia know how hard it is to keep up-to-date with the latest legislation changes. The recent rush of workplace legislation changes may seem like a modern phenomenon, as the Fair Work Act was only introduced in 2010. To recap, in addition to the COVID-related changes like JobKeeper, JobMaker and pandemic leave, this year so far has seen annualised salary changes, four-yearly updates to Awards, and casual overtime changes just to name a few. A cornerstone of the Fair Work Act is the National Employment Standards (NES), the set of 10 minimum entitlements which must be provided to all employees in Australia. One of the minimum entitlements provided by the NES is annual leave: a permanent employee is entitled to four weeks of paid annual leave, per year, with shiftworkers receiving an additional week of paid annual leave on top of that. It is important for employers to ensure that they comply with the NES and provide their employees with their annual leave entitlements. While the workplace relations landscape does change constantly, some things do stay the same. Annual Leave became standard in 1970; but what has changed since and when did employees receive the standard four weeks of annual leave? 1906: The First Annual Leave Entitlement The federal maritime award introduced 10 days of paid annual leave in the early 20th century. This was the first official instance of annual leave in Australia. The introduction of the federal maritime award also came in 1906, after a series of strikes in the 1890s brought employee rights to the fore. The federal maritime award was, along with the shearers award, the first award in Australia. These awards were introduced by the Commonwealth Court of Conciliation and Arbitration, an early forerunner of the Fair Work Commission. 1935 to 1974: Annual Leave Becomes Widespread Paid annual leave – along with sick leave – was gradually introduced into federal awards. The Printers’ Union won one week of paid annual leave in 1935, and soon this entitlement slowly became widespread in Australia. In 1945, in the year that the Second World War ended, workers won the right to two weeks’ annual leave, and between then and 1974 two weeks of paid leave was generally adopted as the standard entitlement through Australia. 1974: Four Weeks for Public Service Workers in NSW Following a decision by the NSW Industrial Relations Commission, four weeks’ annual leave was introduced for each year of service. While this decision only covered public sector employees in NSW, this was the first time that Australian employees in any sector were entitled to four weeks’ paid leave. 1988-2009: A New Act Every 4.25 Years Between 1988 and 2005, there were four major employment relations Acts passed. The Industrial Relations Act 1988, which replaced the 84-year-old Commonwealth Conciliation and Arbitration Act 1904, came into effect in 1989. This Act was then amended by Industrial Relations Reform Act 1993. These Acts were brought in by the Bob Hawke-Paul Keating Labor Party Government, which lasted from 1983 until 1996, when John Howard came into power. In 1996, Howard’s Liberal Government brought in the Workplace Relations Act 1996, which replaced the Act passed eight years previously. In 2005, they passed Work Choices (formally known as Workplace Relations Amendment (Work Choices) Act 2005). Throughout this tumultuous 17-year period, where a new Act was passed on average every 4.25 years, the standard entitlement of four weeks’ annual leave generally stayed intact. The Work Choices Act provided employees with five entitlements, one of which was annual leave. 2009-Onwards The following election was won by Kevin in ’07. The Rudd Government passed the Fair Work Act 2009, which came into effect on 1 July of that year, superseding the Workplace Relations Act 1996. The Fair Work Act outlined the minimum standards that should apply to all employees, one of which is the minimum entitlement of annual leave. Annual Leave Will Stick Around As time has passed, annual leave has gone from a rare entitlement to becoming a standard right for employees in the Australian workplace relations system. Even during the see-sawing of workplace relations legislation for almost two decades before the introduction of the Fair Work Act, it remained a right. Now entrenched, it is unlikely that annual leave will go away. Employers will have to keep themselves up to date on how annual leave works, what their obligations are and what the rights of their employees. There’s no better help available to assist employers get on top of their workplace relations than Peninsula. Call us now for free initial advice on any annual leave question you may have.

Annual Leave

Five Rules Of Annual Leave

National Employment Standards (NES) Annual leave is one of the ten National Employment Standards (NES). Every employee, excluding casuals, is entitled to at least four weeks of paid leave each year. Shiftworkers may be entitled to additional leave under the applicable modern award, agreement or the Fair Work Act 2009. Accrual Of Annual Leave Despite every permanent employee being entitled to at least four weeks of annual leave per year, in most cases the entire balance is not available from the first day. Annual leave will generally accrue progressively throughout the year and will carry over from year to year if unuse Annual Leave Loading Under some modern awards, an employee may be entitled to additional leave loading when on annual leave. This is usually 17.5% or their weekend penalty rate or shift rate whichever is higher.As the loading can vary, it is vital employers check what their relevant modern award or enterprise agreement states, as well as their employment contracts. Under some modern awards, an employee may be entitled to additional leave loading when on annual leave. This is usually 17.5% or their weekend penalty rate or shift rate whichever is higher.. As the loading can vary, it is vital employers check what their relevant modern award or enterprise agreement states, as well as their employment contracts. Upon termination, annual leave must be paid out to employees as if they had taken the leave. This includes any entitlement to annual leave loading outlined in the modern award or enterprise agreement. For advice on annual leave entitlements specific to their workplace employers should contact Peninsula today.

Annual Leave

Understanding Time Off In Lieu

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Annual Leave

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Annual Leave

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