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COVID-19: can we force employees to use annual leave?

ABLA answers the common issues employers are facing due to COVID-19.
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COVID-19: can we force employees to use annual leave?

COVID-19: can we force employees to use annual leave?

11 May 2020

Australian Business Lawyers & Advisors speaks about common issues employers are facing during the coronavirus pandemic.

Q If my business starts to slow down can I make employees take annual leave?

A You and your employees may agree to this as a sensible option to tide the business over, but you are limited in directing leave unless it is “excessive leave”.

The situation with modern award or enterprise agreement covered employees is not the same as award-free employees. Most modern awards and enterprise agreements provide an ability for employers to direct employees to take annual leave if their balance is ‘excessive’. Before giving this direction, it is important to check the relevant modern award or enterprise agreement and follow those rules.

Before directing a modern award-covered employee to take annual leave on the basis that their leave balance is excessive, it is important to check the relevant modern award and follow the rules in it before giving such a direction.

The vast majority of modern awards provide that an employee is considered to have an excessive leave balance if:

  • the employee has accrued more than 8 weeks; or
  • for shift workers, 10 weeks.

A direction to a modern award-covered employee to take annual leave must be in writing and:
  • cannot result at any time in the employee’s remaining paid annual leave balance being less than six weeks taking into account other paid annual leave arrangements
  • must not require taking paid annual leave of less than one week
  • must not require the employee to take a period of annual leave beginning less than eight weeks or more than 12 months, after the direction is given, and
  • must not be inconsistent with any agreed leave arrangement.

For award-free employees, an employer may require them to take a period of paid annual leave if the requirement is reasonable.

The Fair Work Act notes that it may be reasonable if the employee has accrued an excessive amount of annual leave. We would recommend that strong guidance can be taken from the rules relating to modern award-covered employees as to what is reasonable for award-free employees.

This article does not constitute legal advice. For advice, phone Australian Business Lawyers & Advisors on 1300 565 846.

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