Like many small business owners, it’s a fine line to walk when balancing staff leave and their entitlements. Whether it be managing when staff take their leave, or the fact that too much leave has been accrued and needs to be cleared off your P&L or balance sheet. There are a few circumstances when an employer can direct an employee to take annual leave, according to the Australian Government Fair Work Ombudsman, these are:

• The business is forcing a shutdown period (for example over Christmas and New Year period)
• An employee has accumulated excess annual leave
• A business requires its employees to Stand down

As it is fast approaching the festive period, many businesses will be deciding whether they will shut down over this time. In many cases, this is allowed. However, there are rules in place in regard to how much notice is required to give employees about the forced shutdown period. If an employee does not have enough annual leave entitlements to cover the leave then they must have a discussion with their employer about their options, these may include:

• Other paid time, such as time off in lieu
• Annual leave advance
• Leave without pay

Perhaps you have an employee who has excess annual leave that you would like them to use. But what is considered excessive? As a general rule, if an employee has 8 weeks or more of leave accrued an employer can direct them to use some of their leave. In order to do this, there are some regulations regarding best practice, for example:

• The employer must tell the employee in writing that they need to take annual leave
• The employer must give at least 8 weeks notice (and not more than 12 months) of when the leave will start
• The leave has to be at least 1 week long, and can not result in the employee having less than 6 weeks accrued leave (unless the employee chooses to take longer, which then needs to be agreed upon with the employer).

Of course, each industry and award varies in what is allowed for employees and employers. To check what the regulations are for you and your industry utilise this Industry Shutdown Regulations Link or Direction to Take Excess Annual Leave Link to ensure you are provided with the correct details for Australian Businesses. 

What if there is a stoppage required at work, that the employer can’t be held responsible for, such as a natural disaster, equipment being broken (that the employer is not responsible for) or there is industrial action (when it is not organised by the employer)? This is called a Stand Down, and it is different from a shutdown. To find out more information about Stand down’s, please follow this link.

When it comes to HR and small businesses, it can sometimes become a bit confusing, that is why some businesses prefer to seek guidance from a business manager to help them with rules and regulations. Here at Profit First Accounting, we are constantly staying educated on the legislation and any changes there may be, so you don’t have to. Seek guidance from us and we will ensure that you fulfill your employer obligations to your employees. Contact us today, so we can help you with your business, and ensure you are receiving the right advice.