We’re looking at common HR Myths, and debunking these for employers. Last week we looked at the three strikes and you’re out myth. Another common misconception many people have is that annual leave can only be taken after an employee has worked at least twelve months.
A permanent full-time employee is entitled to four weeks paid annual leave per annum, however annual leave accrues with each pay cycle, and there is no legislative restriction on the employee taking their accrued annual leave prior to their twelve-month anniversary.
In fact, there are potential risks in placing a restriction on employees taking paid annual leave within the first twelve months of employment.
Why the ‘no annual leave before 12 months’ continuous service’ rule is risky for businesses
As there is no legislative requirement for employees to work a minimum length of time to access their annual leave entitlements, employees have the right to request to take their annual leave at any stage during their employment. The Fair Work Act 2009 states that “the employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave”. What this means is unless there are reasonable grounds for refusing an employee’s request for annual leave, denying an employee their annual leave request could give them grounds to file a dispute with the Fair Work Commission.
Do employees who take paid annual leave prior to their 12-month anniversary get the full 4 weeks’ entitlement?
An employee taking paid annual leave within their first twelve-months of employment will only be entitled to the pro-rata amount of time that they have accrued. For example, if the employee has worked for six months, they will be entitled to take up to 10 days’ paid annual leave which they would have accrued in that time.
An employee may request to take more annual leave than they have accrued, and it is at the employer’s discretion to approve this request. Some employers will approve the additional requested time off as paid leave, meaning the employee would have a negative leave balance when returning to work. If the employer wishes to grant the leave but not risk paying leave in advance, another option is to provide unpaid leave for the balance of days over and above the accrued paid leave days.
When can an employer refuse a request for annual leave?
A business can lawfully refuse an employee’s request to take annual leave if the business has reasonable grounds to do so. This may include denying time off during busy periods such as the lead up to Christmas where there is an identifiable need to have all staff on board to meet the operational requirements of the business. If this is the case, the business should consider including a ‘block-out period’ clause within their leave policy which stipulates that an employee’s request to take leave during this period can be reasonably denied.
If an employee’s request to take annual leave is refused, the business should document and communicate the refusal to the employee in a timely manner. Documenting is always important to ensure that if the Fair Work Commission were to assess the reasonableness of the refusal, that there is documented evidence to support the employer’s decision.
To assist businesses in carrying out a fair process consistently across their workforce, we recommend having policies and procedures in place for managers and employees to clearly understand the process that will be followed in the event a leave request is denied.
For more information around annual leave management, see our articles on Managing Unauthorised Leave and Overlapping Leave Requests.
Cornerstone can assist employers in developing processes that meet legal requirements and take into account the practicalities of carrying out these processes correctly within each unique business. If you require assistance managing leave processes or have any questions around leave accrual and employees taking leave, don’t hesitate to get in touch with our team, via the chat box here or calling us on 08 6150 0043.
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