Employers can refuse or cancel leave requests based on reasonable business needs, but must ensure the reasons are genuine and do not cause significant inconvenience or financial loss to the employee.
Understanding annual leave entitlements
Full time employees are entitled to accrue 4 weeks of annual leave for each year of service (pro-rata for part-time employees). Shift workers may earn more, depending on their circumstances.
Annual leave will start to accrue from the employee’s first day of employment and will roll over from year to year to year if unused. This means that employees can potentially take more than 4 weeks of leave in a year if they have accrued a sufficient leave balance.
When employment ends, employees must be paid out for any accrued but untaken annual leave. In some circumstances employers and employees can agree to cash out annual leave during the employment, provided the agreement complies with the Fair Work Act and any applicable industrial agreement.
Refusing annual leave requests
The process for applying for leave is typically outlined in employment contracts, awards, enterprise agreements, or company policies. An employee cannot take annual leave without approval.
It is important to ensure that any refusal is based on reasonable and genuine business reasons. For instance, you might need to refuse leave during a busy period, where the employee has provided an unreasonably short period of notice, or if other employees in similar positions already have approved leave.
The Fair Work Commission has previously supported the idea that it’s reasonable for a retail business to implement leave block-out periods during peak times such as Christmas, New Year, and Easter. However, what is reasonable in one business may not be reasonable in another.
When refusing a leave request, we suggest that you follow these steps:
- Assess: Consider the impact on operations, workload, and team dynamics.
- Communicate: Explain the reason for refusal transparently.
- Consult: Consider what the employee has to say in response to the refusal, and see whether its possible to reach an agreement.
- Document everything: As lawyers, we love records! Keep records of the request, communication, and reasons for refusal.
Cancelling annual leave
There may be situations where either you or your employees need to cancel approved annual leave. For instance, you might need to cancel an employee’s leave if your business is busier than usual and requires more staff on hand.
There is no general legal right to cancel annual leave. Employers can only cancel approved annual leave if the cancellation is not unreasonable, and ideally the cancellation should be agreed.
It’s likely to be unreasonable for an employer to cancel annual leave if the cancellation causes significant personal inconvenience or financial loss for the employee. For example, if an employee has already booked and paid for a holiday, cancelling their leave without a very compelling business reason would likely be considered unreasonable.
Conversely, it may be reasonable to cancel approved annual leave if the employee is taking a short period of leave and will not incur significant inconvenience or personal loss. This is particularly true in situations where there is an unexpected surge in workload or a critical deadline. For instance, if a new project comes in with a tight deadline or several employees are off sick, cancelling leave to ensure business continuity might be justified.
Additionally, awards, enterprise agreements, employment contracts, and workplace policies may include specific rules about cancelling approved annual leave. Be sure to review these documents before cancelling leave.
Next steps
To effectively manage annual leave, employers should focus on three key actions:
- First, review and clearly communicate your leave policies to ensure all employees understand the procedures and expectations.
- Second, document all decisions related to leave requests, approvals, refusals, and cancellations to maintain transparency and compliance.
- Finally, regularly assess your business needs and plan accordingly, implementing strategies such as block-out periods during peak times to ensure smooth operations.
By taking these steps, you can balance business continuity with fair and transparent leave management.
If you have any questions please don’t hesitate to contact Luke or Emily.
| Luke Phillips Lawyer T: (03) 6235 5184 E: lphillips@pageseager.com.au |
 |
| Emily Creak Principal M: 0400 955 183 E: ecreak@pageseager.com.au |
 |
Published: 16 July 2024
