After a busy year at work, a holiday is well and truly deserved! Annual leave allows employees (excluding casual workers) to take a break, while still receiving income. However, there are a number of processes, rules and complexities that arise in navigating when leave can be taken and how long for. Legal Kitz has put together this handy explainer to help clear up some confusion!
What is paid annual leave?
Each year an employee works for an employer (excluding casual workers) they accumulate paid leave in which they are entitled to take some time off, whilst still getting paid their base pay rate. However, employees are welcome to accumulate their leave and action it on their terms, but a request must be made and approved by the employer in advance. There may be exceptions to this if stated in their award that require them to take annual leave, such as if the business shuts down for a period of the year.
An employee’s leave request must only be refused under extremely reasonable circumstances. Further, it is important to note that annual leave is distinct from other forms of leave, such as sick leave or community service leave. Therefore, taking days off as a result of a public holiday, sick leave or community service leave does not withdraw from annual leave entitlements.
How is annual leave paid?
An employee’s base pay rate is determined by the ordinary hours they work in a week (cannot exceed 38 hours per week) but does not include any overtime or penalties rates, nor allowances usually incurred. Negotiations with the employer and clauses within the relevant registered agreement may outline different methods of payment during annual leave, which may result in a pay rate higher than the base rate of pay.
What is the process of requesting annual leave?
The process of requesting leave should be outlined in either the company policy or the contract of employment (Business Kitz subscription service has a number of top-notch employment agreements available via their subscription service) that the employee signed upon being hired. Alternatively, if your company has a registered agreement, this will also stipulate the relevant terms of leave you are entitled to, and necessary obligations for requesting leave. To find the relevant enterprise agreement, you can use the Find an enterprise agreement portal on the Fair Work Commission website. Every registered agreement must align with and uphold the National Employment Standards, to which is fundamental. Such agreements may outline a specific notice period required before taking ot ‘cashing out’ annual leave.
The underlying rule is that the employee’s proposed leave period (when and how long their leave will be) is negotiated and communicated with the employer. The more notice you give, the more likely you are to be granted your desired leave dates.
How much annual leave is an employee entitled to?
For every year an employee works for their employer, they accumulate four weeks of annual paid leave. However, the number of ordinary hours an employee works may allow extra leave to be afforded. For example, A ‘shift worker’(someone who is regularly rostered on late night shifts or regularly works Sundays and public holidays) may be entitled to five weeks of annual leave.
Although annual leave is accumulated on a yearly basis, it does not have to be taken each year. Some may choose to ‘save up’ their annual leave and take a longer time off after a few years.
Are there exceptions?
Entitlements surrounding leave can get muddy when navigating accumulated leave in the instance of a transfer of employment, or options for ‘cashing out’ annual leave. We recommend using the National Employment Standards as a useful reference point in these more complex situations.
In the case of employment being terminated, the employer must pay the employee any accumulated leave they had not taken at the same rate as if they had taken it.
There may also be situations in which an employee takes leave in advance. However, this must be agreed to in writing and signed by both parties, including details surrounding the date of leave and period of leave.
Legal advice
If you still have questions regarding annual leave entitlements, Legal Kitz is here to help! If you think your employer has been unfair or failed to comply with your leave requests on an unreasonable basis, please contact us for legal advice. We offer FREE 30-minute consultations to assist you with any queries or concerns regarding employment rights. Book here now for your free consult.