What is forced annual leave?
Forced annual leave is when an employer directs or mandates that one or more employees must take annual leave. Employees may be asked to take annual leave at a certain time of year and for the number of days specified by the employer. The employer may also give employees a deadline by which they must use a designated portion of the leave they have accrued.
While it is known as forced annual leave, it is not a punishment or a penalty for employees. The term simply acknowledges that it may not be the employee’s preferred time of year or way to use their annual leave entitlement.
Forced annual leave is commonly used around public holidays such as Christmas and Easter, when employees often wish to take time off to celebrate or relax anyway. Businesses may find their workload slows because their customers and clients are also taking a break, so it may be financially beneficial to close temporarily and give staff a break. This is called a shutdown period. Some employers base this decision on workforce requests to take annual leave, with more staff wanting to take time off than the lowest number required to keep their business open and running efficiently.
However, employees may be directed to take annual leave when their entitlements have accrued to a level that may affect the business or their long-term performance.
When can forced annual leave happen?
The Fair Work Act 2009 provides for an employer to direct taking annual leave during a shutdown if their award or the registered agreement provides for it. For employees who aren’t covered by an award or enterprise agreement, employers may direct them to take annual leave if the requirement is reasonable; this includes a temporary shutdown, such as between Christmas and New Year.
The Fair Work Act also makes provision for an employer to direct an employee to take excess annual leave. Some awards and enterprise agreements specify what excess annual leave is – generally, at least eight weeks of accrued annual leave. If no award or agreement applies, then the leave directive has to be ‘reasonable’.
Directed or forced annual leave allows employers to manage leave requirements fairly for all staff, and to manage the cost of leave and its impact on cash flow.
Enforcing long service leave is not as simple as directing staff to take annual leave, as this entitlement generally comes from state and territory legislation. These laws define how long someone has to work for an employer to qualify for long service leave, how much leave they get, and sometimes, how much notice has to be given before taking the leave. Your state or territory’s work safety or industrial relations authority will be able to provide specific information.
What to expect from employees?
Employees may question if their employer can force them to take annual leave. Australia’s standard annual leave entitlement of four weeks a year may seem to employees to be easily diminished if they do not have the flexibility to take it when it suits them. If you want to force employees to take annual leave for the first time, you may want to be prepared for three common reactions.
Resistance
If employees have previously had the freedom to choose when they can take their annual leave, they may not appreciate being forced to take it at a certain time. Employees may also want to save or earmark their leave entitlements for personal reasons, such as taking an extended holiday or starting a home renovation project. Being forced to take some of their entitlements when you wish them to may not suit them or may delay their plans, which can cause employee dissatisfaction.
Confusion
Employees may not be against taking leave at your direction but are confused about how it will work or may affect them. For example, they may be confused about whether they will still be paid or if the time off will be in addition to their standard entitlements. This can cause stress for some employees.
Acceptance
On the other hand, your employees may be happy that they will receive the time off. This may particularly be the case if it has been challenging to access leave at that time of year in the past., for example, if there was a previous limit on the number of employees on leave simultaneously.
However, be prepared for employees wanting more time off than suits your operations. For example, you may prefer a one-week Christmas shutdown period and that staff return to work on the first business day in January. Meanwhile, your staff may prefer taking a longer break at this time of year to enjoy the festivities and go on a holiday.
Keep in mind the ramifications for your operations if a forced break encourages some to request more time off, and you are faced with returning to operations with a skeleton staff.
How do you communicate forced annual leave?
To best implement forced annual leave plans, ensure you take these steps.
Understand your obligations
Familiarise yourself with the conditions under which you can lawfully direct employees to take annual leave, outlined in the award or registered agreement under which they are employed. Consider if these conditions match your plans. The award or registered agreement may also outline how much notice you need to give employees.
Consult employees
While you may already have decided to implement forced annual leave, it is still important to consult employees. If there is strong dissatisfaction, you may find it is better for workplace culture and morale to drop the measure.
Consulting with employees before giving notice also allows you to negotiate if required. For example, staff may prefer a two-week shutdown period instead of your proposed one-week shutdown. Some employees may be able to continue working at home, rather than in the workplace. For example, a factory may cease operating, but the administration staff can keep working at home.
When forcing employees to reduce an excess amount of annual leave, this may provide the opportunity to discuss the reasons for accruing it. In this conversation, you can determine if it is worthwhile to wait until the employee takes their holiday, for example. Meanwhile, if they feel they have too much work to be able to take time off, you may also take steps to address workload issues or burnout.
Provide notice to employees in writing
Whether the notice is provided to employees in an email or a letter, it’s important to give it in writing, so people have a copy to refer to. If the leave is required for a shutdown, include the start and finish dates in this communication. If you need staff to reduce excess leave, it’s a good idea to suggest the amount to be taken to reduce the accrued amount to a reasonable level, and the deadline you’d like it to be taken by.
The Fair Work Ombudsman website has a downloadable template if you are unsure what to include in writing. Remember to keep a copy for your records.
Whether it is forced annual leave over Christmas or addressing annual leave excess, directing employees to take annual leave may be an uncomfortable task but necessary. Remember that not all employee reactions may be negative, and being prepared to negotiate may make it a smoother process. Being prepared with information, however, is the best way to start.
Read more: Unlimited Holiday Policy
