What is a time-off policy and why do you need one?
A time-off or leave policy outlines an organisation’s rules and guidelines for the different types of leave that employees can use when they wish to take paid time off work. The National Employment Standards (NES) set out the minimum legal requirements for types of leave and employee entitlements. If employees are covered by an award, employment contract, enterprise agreement or other registered agreement, their entitlements may be more than the NES, but cannot be less. Any employer may choose to offer additional and/or greater leave entitlements than the NES as an incentive.
Every employer should have a clear time-off policy in place to regulate their staff’s annual leave and other days spent not working. It’s only natural that there are occasions when an employee’s personal life needs to take precedence over their professional life, and your organisation should be able to accommodate this.
Tip: A time-off policy is often also referred to as a leave policy.
Having an attractive time-off policy can help make you a desirable employer. After all, your current and prospective employees will appreciate having the opportunity to use a streamlined process when requesting to take time off for various planned or ad hoc out-of-office activities. This could boost employee morale and productivity and, what’s more, even help you attract the best talent.
What are typical reasons for time off?
Your employees may request time off for a number of reasons, and your leave policy should cover as many as possible.
Typical examples of reasons for time off include:
- Annual leave
- Jury duty
- Training and development
- Parental leave
- Sick leave
- Carer’s leave
- Force majeure event (e.g. COVID or a weather event such as flooding)
Time-off policy template
It’s worthwhile spending some time on creating two important documents:
- an accrual template that makes it clear exactly how much time off each staff member has accrued over the year,
- and a standard form for employees to use in order to request time off.
Time-off accrual template
Depending on the size of your business, you may want to set up an interactive spreadsheet or use specialised software to track your employees’ time-off accrual. Either way, you should have a chart with a formula that measures each person’s length of employment and how much time off has been earned based on their hours worked.
Here is an example of such a formula for a company where employees get paid weekly:
- If employed 104 hours
- If employed 1-4 years, 2.25 hours leave accrued per 40 hours worked. Leave accrued for year: 117 hours
- If employed 5-10 years, 3 hours leave accrued per 40 hours worked. Leave accrued for year: 156 hours
- If employed 10+ years, 4 hours leave accrued per 40 hours worked. Leave accrued for year: 208 hours
Time-off request form
Set up a standard leave request form that lets your employees take time off from their job as needed so they can return to work focused and ready to deliver their best work. A time-off request form is a formal document that logs when an employee asks for time off and whether their manager has approved or denied this request. The easiest way is to have an electronic form that employees can easily fill in and submit from their devices. Of course, you can also have a paper-based form if you prefer.
In either case, a time-off request form should include these details:
- employee name and department
- date the request was submitted
- dates the employee is asking to take off
- reason for time off
- signatures from both employee and manager
- note whether the request is approved or denied
Remember, the easier you make life for your employees, the more desirable you will be as an employer, and the more likely you are to attract and retain the best talent.
Here’s what a completed time-off request form might look like:
Request for leave
Johnson Accounting Solutions
Date request submitted: 10/02/2022
Employee name: Jane Miller
Department and job title: Sales / Field sales representative
Dates requested for leave: 15/03/2022 – 30/03/2022
Type of leave: Annual leave
Leave approved: Yes X No_
Employee signature: Jane Miller
Manager signature: Jim Smith
Managing time-off requests
Your time-off policy should also cover some guidelines on how your company will manage leave requests. It should clearly state how your business will tackle any issues that may arise, and what time frames apply to requests for leave.
Set up time frames for leave requests:
Each company has a different policy, but time frames for requesting time off typically range from one week to one month in advance. This must be clearly stated in your company’s employee handbook. Notice periods primarily cover requests for planned leave such as holidays or scheduled medical procedures, but you should also include information on the process for emergency incidents that may cause your employee to request immediate leave without being able to give advance notice.
Specify restricted dates:
Make sure your employees are aware of any specific dates that they won’t be allowed to take off unless in the event of an emergency such as a death, accident or sudden illness in the family. Such a rule helps your employees schedule events such as holidays around those dates and better manage their time off in the long term.
Approve time-off requests promptly:
You want to keep your employees as happy as possible and keep them motivated at all times, so when you receive a request for time off, try to approve it whenever possible, unless you have a really good reason not to. In fact, the Fair Work Ombudsman stipulates that an employer can only refuse an employee’s request for annual leave if the refusal is deemed reasonable, so you need to have a valid reason to decline an appropriate request for leave.
Get back to the staff member with your decision as soon as realistically feasible. This will help them plan their time off and make travel arrangements such as booking accommodation in a timely manner. Your staff are sure to appreciate your consideration here.
Addressing potential issues related to leave requests
As with anything, employee time off has a few pitfalls that you should be aware of and ideally cover in your time-off policy.
Set up a system for dealing with overlapping time-off requests:
It may happen that two employees request to take the same time period off. Employers need to have guidelines in place to deal with such cases and to decide who will be permitted to take the requested time off. You could, for example, base your decision on the urgency of the reason for the requested leave, or simply grant leave on a first-come, first-served basis.
Ensure that productivity is maintained during staff absences:
Make sure you have a temporary hierarchical structure in place, in particular for when vital employees take time off. Delegate important tasks to other employees who are willing to take them on.
If an employee is going to be on extended leave, you may want to consider hiring a temporary replacement in order to manage their workload.
Have guidelines for negative leave:
Negative leave simply refers to an employee taking time off before they have actually accrued it (remember the leave accrual table above?). This usually means the employer ‘loans’ the employee some paid time off, and the employee can pay back this ‘loaned time’ by subsequently accruing the necessary time until the loan is covered.
Another option might be for you to deduct this time from the employee’s salary through a voluntary wage deduction until the corresponding amount is paid back in full. Naturally, the employee must agree with whatever option you choose.
Unpaid time off:
In most cases, your employees will take paid time off, whether for their annual family holiday, moving house or a medical procedure. However, in some cases, an employee may have already used up all of the paid time off they are entitled to, which means they will need to request unpaid leave if an emergency arises.
Talk to your employee and come to an agreement. They may, for example, be able to take some of their sick days or additionally accrued leave in this case. Try to make the process as easy for them as possible and show compassion for their personal circumstances.
Your employees will value the clarity a good time-off framework brings, and you as an employer will benefit from the simpler processes and decision-making aids offered by a sound leave policy.