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. An employer may choose to offer additional and/or greater leave entitlements than the NES as an incentive to attract and retain the best employees.
While the NES, awards and contracts stipulate how much leave an employee is entitled to, a company time-off policy provides guidance on matters such as how leave requests are made, who approves leave and approval is given.
Having a clear time-off policy gives your current and prospective employees a streamlined process to follow when requesting time off for planned or ad hoc out-of-office activities. It can help ensure all employees are treated fairly when requesting leave, and may be an effective framework for ensuring legal compliance.
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What are typical reasons for time off?
Your employees may request time off for a number of reasons, and your leave policy should cover all employee entitlements under Australian employment legislation, as well as any additional ones included in awards, registered agreements and individual contracts.
Typical examples of reasons for time off include:
- annual leave
- bereavement
- 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 record 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 to request time off.
Time-off accrual record
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 as it accrues. Either way, you should be able to identify quickly how much leave each employee has accrued. Knowing this information is vital for employees requesting leave, and for managers and supervisors approving leave. In addition, untaken accrued leave is a balance sheet liability for a company, and so requires active management.
Here is an example of how leave accrues for an employee who receives the NES entitlement of four weeks’ annual leave a year, and works the standard 38-hour week:
- ordinary hours worked per week / 52 weeks (of the year) x 4 (weeks annual leave entitlement) = hours of leave per completed week of service
- 38 /52 x 4 = 2.923.
Time-off request form
Providing a standard leave request form streamlines leave requests for employees, and can provide a record of leave approval and time time taken for employers. 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.
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Here’s what a completed time-off request form might look like:
Request for leave
Wavewood Accounting Solutions
Date request submitted: 10/02/2022
Employee name: Sherrie Nguyen
Department and job title: Sales / Field sales representative
Dates requested for leave: 15/03/2026 – 30/03/2026
Type of leave: Annual leave
Leave approved: Yes X No_
Employee signature: Sherrie Nguyen
Date: 10/02/2026
Manager signature: Miranda Moon
Date: 12/02/2022
Managing time-off requests
Your time-off policy should provide guidelines on how your company will manage leave requests, including 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
Every organisation has different policies, but timeframes for requesting time off typically range from one week to one month in advance. You’ll want to state this clearly in your 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 any restricted dates
Make sure your employees are aware of any peak periods during which leave may be restricted, subject to applicable awards or agreements and business needs. Communicate any proposed restricted periods in advance and consider reasonable exceptions.
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 valid reason not to.
Aim to approve requests where feasible; when a request cannot be approved, document the business reasons and communicate them clearly, consistent with your policy and applicable laws. Get back to the staff member with your decision as soon as possible. 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, leaving a team or department understaffed. 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 sufficient coverage for the employee’s workload, whether by using other staff for coverage or by employing a temp, especially if the leave period is lengthy. Where the employee on leave is a manager or supervisor, make sure everyone is informed about temporary reporting lines in their absence.
Have guidelines for negative leave
Negative or advanced leave simply refers to an employee taking time off before they have actually accrued it. This usually means the employer ‘loans’ or ‘advances’ 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. If you use wage deductions, obtain the employee’s written authorisation and ensure the deduction is permitted by law and any applicable award or enterprise agreement.
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 all of their paid time off, which means they will need to request unpaid leave if an emergency arises.
Talk to your employee and come to an agreement. Any use of personal/carer’s leave must be within legal entitlements and your policy (including any evidence requirements). Where paid leave is not available, consider unpaid leave as appropriate. 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.
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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.
This article on Hiring Resources for Employers provides general information only and does not constitute legal or tax advice. Obtain advice tailored to your circumstances.
