DavidBates headshotThis month AGHA’s HR expert, David Bates from Workforce Guardian, answers a question from Samantha, an AGHA Member based in Sydney.

"I have a retail store with 3 full-time employees and 2 casuals. One of my full-time employees – who has been with the business for almost 7 years now – has accrued almost 20 weeks of unused annual leave. I would like to tell this employee she must take some of this leave as the balance is a significant liability for me and I think she deserves a break! Can I tell her she must take some or all of her annual leave?"

DB Responds:
Thanks for your question Samantha. I’m pleased to confirm that, as a result of recent changes made to most Modern Awards, it is now possible for you to direct your employee to take some (but not all!) of her accrued annual leave.

Under the recent amendments made by the Fair Work Commission to almost all of the 122 Modern Awards currently in operation, employees who:

a) are covered by one of the amended Awards, and
b) have accrued an 'excessive' annual leave balance

can be directed to take some of their leave, subject to the following strict rules:

  1. The employee can only be directed to take annual leave if they have an 'excessive' balance. This is defined as at least 8 weeks of annual leave for non-shift workers, and 10 weeks for shift workers. In your case, Samantha, the employee's balance clearly meets the applicable threshold!
  2. The employer must attempt to 'confer' with the employee about their excessive leave balance. Hopefully, this will result in the employer and employee reaching mutual agreement about some of the leave being taken in the near future.
  3. If mutual agreement can't be reached, the employer can then direct the employee to take some of their leave in minimum blocks of at least one week at a time.
  4. These so-called 'directed leave periods' must begin between 8 weeks and 12 months from the date the direction to take leave is issued by the employer.
  5. The employee must have a remaining balance of at least 6 weeks of annual leave after the directed leave period has been taken.
  6. The employer's direction must not be inconsistent with any other leave arrangements already operating in the workplace.

Lastly, it’s important to note written records of both the direction and the leave itself must be kept for future reference, and genuine consideration also needs to be given to any subsequent requests for annual leave made by the employee even after a formal direction to take leave has been issued.

While the above rules are somewhat bureaucratic and quite inflexible, they at least provide most employers with a way to reduce annual leave liabilities and encourage a better work/life balance.