Sisters in Law: Bosses can’t force employees to take accrued annual leave

A worker with 60 days of annual leave stored up has been given an ultimatum by her boss to use it or lose it. This is what she needs to know.

Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn help a woman who is being pressured to take all of her accrued annual leave.

QUESTION:

I’ve worked for the same company for six years and I’m very happy in my job. It’s very busy and sometimes it’s hard to schedule in annual leave around deadlines and projects. For that reason I have almost 60 days of accrued leave. I never saw this as a problem but we recently had a staff memo saying we need to take all of our accrued leave by the end of the financial year or we’ll lose it. I genuinely have no idea how I’ll schedule in 60 days of leave between now and June 30. Are they allowed to make us take all our annual leave before a certain date? – Stacey, NSW

ANSWER:

The ‘use it or lose it’ scenario your employer is threatening is unlawful.

There is no lawful basis for your employer to reduce or eliminate your accrued annual leave balance if you don’t take it within a certain time frame.

If your employer did this, it would be in breach of the National Employment Standards (‘the Standards’), and they could potentially be fined.

If your employer continues to make this threat, you should speak to a lawyer or make a complaint to the Fair Work Ombudsman.

The Standards say that annual leave should be taken by agreement between the employer and the employee.

However, in certain circumstances, your employer may be able to direct you to take leave even if you don’t agree.

There are a number of reasons your employer may want you to use annual leave, including:

· To protect your wellbeing from a health and safety perspective and ensure you don’t get burnt out

· To help with managing their financial position, as annual leave is recorded as a liability and would have to be paid out if you left

· To avoid the scenario where employees build up big annual leave balances and then all want to take long holidays at once.

You should check whether your employment is covered by a modern award or enterprise agreements, as these may include options to address your issue.

There could be a number of reasons why your employer wants you to take your annual leave. Picture: iStock

If you are covered by a modern award or enterprise agreement, it may contain rules about when and how your employer may direct you to take annual leave, such as requiring a certain period of notice to be given, or setting a maximum amount of leave that you can be directed to take.

If you are not covered by an award or an enterprise agreement, and your contract of employment is silent on this topic, the Standards only allow an employer to direct an employee to take annual leave if the direction is reasonable.

A requirement to take annual leave can be reasonable if, for example, you have an excessive annual leave balance (about eight weeks’ accrued leave, or 10 weeks’ accrued leave for shift workers) or your employer’s business is being shut down for a period.

You may be required to take annual leave if you have racked up more than two months’ worth. Picture: Supplied

Given your nearly 12 weeks of accrued leave, it’s likely reasonable for your employer to direct you to take annual leave. However, requiring you to use up all your leave by the end of the financial year is likely not reasonable, as there are only about 90 work days between now and the end of the financial year (assuming you work a Monday to Friday roster and have public holidays off).

As such, you should try to negotiate a plan to take a smaller amount of leave over a longer period of time.

Another option is to cash out your leave. This is only allowed if both you and your employer agree to it. Your employer cannot force you to cash out your annual leave.

If you are covered by an award or an enterprise agreement, it might contain particular rules about cashing out annual leave.

If you’re not covered by an award or agreement, the Standards contain the following rules about cashing out annual leave:

· You and your employer must agree to cashing out annual leave

· You must retain at least four weeks’ annual leave after leave is cashed out

· There must be a signed, written agreement that outlines the amount of leave being cashed out, the amount of the payment and the date it will be paid, and

· The payment for the cashed out leave has to be the same as what you would have received if you took the leave

We suggest you work with your employer to take annual leave to get your balance below eight weeks, whether by taking leave, cashing out your leave, or a combination of the two.

Don’t forget the purpose of annual leave is to allow time for rest and recuperation, and you should try and use it for that purpose if you can.

If your employer reduces your annual leave balance on July 1, 2021 because you didn’t take as much leave as they wanted you to, you should seek legal advice immediately.

This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.

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