It feels like it’s minus eleventy seven outside and my Insta feed is full of fabulous people holidaying in the European sun, so it seems like a good time to talk about annual leave and the obligations of employers and employees.
The Fair Work Act National Employment Standards and Minimum Conditions of Employment WA provides for all permanent employees in Australia to be entitled to paid annual leave, casual employees do not accrue leave, but are instead paid a casual loading of 25% on top of the ordinary hourly rate to offset having to take unpaid leave.
Annual leave is paid at the employees current hourly rate, that means if an employee receives a pay increase any accrued leave is paid at the new rate of pay, the leave isn’t broken down to old rate / new rate. If a public holiday falls within a period of annual leave, that day is not a day of annual leave. Unused annual leave is cumulative and paid out on termination of employment.
All full time employees receive the equivalent of 4 weeks annual leave per year, with shift workers receiving the equivalent to 5 weeks per year. The definition of shift worker varies dependant on the applicable Award or Agreement so in some cases the fact you work nights or weekends doesn’t necessarily define you as a shift worker for this purpose. Part time employees receive annual leave pro rata based on the ordinary hours of work. Annual leave is accrued per pay based on your ordinary hours of work and it’s best practice for the amount accrued and the balance to be contained on the employees payslip.
Some Awards & Agreements also have the provision for Leave Loading, Leave Loading is an amount of 17.5% of the ordinary hourly rate paid in addition to the paid annual leave. Originally introduced to supplement the wages of employees going on annual leave who relied heavily on overtime, Leave Loading is now a common inclusion in most National and State based Awards. Therefore if you aren’t paying Leave Loading to an employee employed under an Award who is entitled to it, you must ensure their hourly rate is high enough to compensate.
Q. AN EMPLOYEE WANTS TO TAKE A PERIOD OF UNPAID LEAVE TO GO ON A HOLIDAY BUT THEY HAVE NOT ACCRUED SUFFICIENT ANNUAL LEAVE. DO I HAVE TO APPROVE THIS? WHAT DO I DO IF THE EMPLOYEE SAYS THEY ARE GOING ANYWAY?
You do not have to approve unpaid leave to take a holiday, though, if the employee has a good work history, and it wouldn’t disadvantage the organisation to have them away from work for the period of time you could offer Leave Without Pay to allow the employee to take their holiday.
If the employee threatens to take the leave anyway, you can warn the employee that you will terminate their employment if they take an unauthorised absence from work.
Q. AN EMPLOYEE HAS TAKEN APPROVED ANNUAL LEAVE, HOWEVER, THEY FALL ILL/ARE INJURED DURING THIS PERIOD. IS THE EMPLOYEE ENTITLED TO BE PAID ANNUAL LEAVE OR PERSONAL LEAVE FOR THAT PERIOD?
Depending on how section 89 (2) of the Fair Work Act is interpreted, there is no strict legal entitlement for an employee to take personal leave during a period of annual leave. However, there is room for HR intervention. If the employee can satisfy the notice and evidence requirements of the personal/carer’s leave provisions of the Fair Work Act, then yes, that period of time can be taken as personal/carer’s leave assuming that the employee has an available personal/carer’s leave balance.
So in many cases where a person becomes sick during annual leave, a decision is made on the basis of evidence and good HR judgement to cancel the annual leave and replace it with personal leave.
Q. WHAT FACTORS ARE TAKEN INTO ACCOUNT IN DETERMINING WHETHER AN EMPLOYER CAN “REASONABLY” REFUSE A REQUEST FOR ANNUAL LEAVE?
This is not defined in the Fair Work Act. However, we expect that it would depend on the notice the employee has given of the intention to take leave, the notice the employer has given of the refusal, the grounds for the refusal and the impact that the refusal will have on the employee. My suggestion is if you have a leave policy, or the notice period for the application of leave is mentioned in an Award or Agreement, and the employee has complied with the notice period, unless the refusal is on strong “reasonable business grounds” I would not recommend declining the leave.
Q. CAN I DIRECT MY EMPLOYEES TO TAKE ANNUAL LEAVE AND IN WHAT CIRCUMSTANCES?
You can require employees to take annual leave if the requirement is reasonable. Factors determining reasonableness include the reasons for imposing the requirement and the notice given of the requirement. It will be reasonable during Christmas shutdowns or when accrual is excessive (provided the employee understand when leave is excessive and is given reasonable warning that he or she needs to run down accrual). Modern awards and enterprise agreements often provide clauses dealing with directions to take annual leave so these should be consulted when considering a direction of this nature.