The end of another year is fast approaching and what a rollercoaster year 2021 was. Lockdown across NSW became the new norm. It has, however, become difficult for employers to properly manage employee annual leave balances due to the pandemic and staff members building up large amounts of leave.
So now you’re left asking yourself “will this create a financial burden?” Or, can you afford the leave or management of staff? Here, we take a deep dive and give you the facts so that you can feel more prepared.
Accruement of leave
The pandemic allowed employees to accumulate their leave, which could definitely impact the financial stability of the business as travelling opens up and staff members are aiming to go on a holiday for extended periods of time. With so much leave accumulated, it gives them the freedom that employers may not be able to give. It becomes increasingly difficult when multiple employees have built up significant amounts of leave and they want to take leave at the same time as one another. This can affect the overall day-to-day operations of the business and can cause a rift between employer and employee.
As a business owner/employer, you may choose to shut down during the holiday period, which will require your staff to take annual leave during this time. As stated in the Fair Work Act, if a requirement is “reasonable” you can urge that employees who are not supported by an award or agreement, take a period of annual leave. Requiring your staff to take leave over a period of temporary business closure can be an instance of a “reasonable” condition.
Cashing out leave
Being an employer gives you the opportunity to cash out some of an employee’s leave balance, but that can only occur if the directed employee agrees to the idea. This agreement needs to be in writing and your staff member must not be left with a leave balance of below four weeks. In case you didn’t know, staff employed under an award or mutual agreement can only cash out at most two weeks of leave every 12 months.
Employee leave requirements
Since you are an employer, you have the ability to ask your staff to use their leave in the same year they accumulate it by stating in their policies and terms & conditions that if a staff member builds up a certain amount of leave, they must talk with their supervisor in charge about a convenient time to take it for both parties. Accumulated leave cannot be lost because a staff member hasn’t used it within the allocated time period. If one of your employees does not follow the policy, they are still qualified to build up their leave and on termination, have it paid out.
It is vital as an employer to understand the management around annual leave allowances and, even more so, be able to reach a mutual agreement with your employees around managing leave accruements. If you are looking for accounting advice, or need help with how to properly manage your employees’ leave, then do not hesitate to contact us on 1300 HOP 123 and we will certainly be able to help you.