Proctor : December 2018
43 PROCTOR | December 2018 Your legal workplace Basic entitlements – annual leave by Robert Stevenson Full-time and part-time employees are entitled to four weeks’ paid annual leave for each year of service under the National Employment Standards (NES). The entitlement accrues progressively during each year, is cumulative and is paid out on termination. ‘Service’ does not include periods of unpaid leave (for example, unpaid personal leave, unpaid parental leave). Public holidays are not counted in any annual leave period, nor is any period of personal leave. There is no requirement to work for a year before being able to take annual leave. For both award employees (this will usually be the Legal Services Award for private legal practices) and non-award employees, annual leave may be taken as agreed with the employer and the employer must not unreasonably refuse a request for annual leave. Relevant considerations can include the respective needs of the employer and employee, industry custom and practice, and the amount of notice given in refusing the request. For award employees covered by the Legal Services Award: • A loading of 17.5% is payable on annual leave (which is also payable on any annual leave payment on termination). • Annual leave may be taken in advance subject to written agreement and any overpayment can be deducted on termination of employment. • An employer can require annual leave to be taken as part of a close-down (for example, Christmas-New Year) if at least four weeks’ notice is given; • An employer can direct an employee to take annual leave where they have an accrual of more than eight weeks, subject to certain requirements. • There is no general ability to direct an employee to take annual leave. Both award-free and award employees can make an agreement to “cash out” annual leave if the agreement is in writing, the employee receives the same amount as if they had taken the leave and the employee keeps at least a four-week annual leave balance. For award-free employees (usually this will be admitted solicitors for private legal practices): • There is no statutory requirement for leave loading. • An employer can impose a reasonable requirement on an employee to take annual leave (which would cover the Christmas close-down situation). • There is no ability for employers to make a deduction on termination for annual leave taken in advance. What happens if the employer directs a Christmas close-down but an employee does not have a sufficient annual leave accrual to cover the absence? In this situation, there is no general stand-down power. An employer cannot direct an employee to take unpaid leave and will be required to pay the employee as if they were at work, even if the business is shut down. What happens if there is a dispute about taking annual leave? Award-based employees may have an entitlement to raise a dispute in the Fair Work Commission under the terms of their award. This entitlement does not exist for award-free employees and any legal avenue to challenge an employer’s decision will largely depend on evidence of an unlawful motive on the employer’s part. The parties should consider taking part in voluntary mediation. Employers should actively monitor annual leave accruals and encourage employees to take annual leave to rest and refresh, rather than accruing large amounts of annual leave which may cause practical issues when the employee wishes to take a large chunk of annual leave and/or be a financial burden for the employer on termination. Rob Stevenson is the Principal of Australian Workplace Lawyers, email@example.com .