The heat has arrived in the North West and the countdown to Christmas is here. This is an opportunity for employers to review how their business deals with one of the biggest liabilities that sits on their books. It is of course annual leave.
The January period in the region for many industries and sectors is often the quietest month which in turn may or may not require a fully staffed workplace.
Under the National Employment Standards (NES) workers in full time employment are guaranteed a minimum four weeks annual leave per year or for some shift workers 5 weeks. If those minimum weeks of annual leave are not taken during the calendar year the residual leave not taken accumulates. If this is multiplied over a number of years a significant liability owed to employees can leave a business exposed.
A practical way to reduce this liability is to direct or require employees to take their annual leave over the Christmas/New Year shutdown. Approximately 28% of Australian workers are ‘forced’ to take annual leave each year.
Whether or not an employer can require an employee to take annual leave depends on the terms of applicable modern award (noting that there are 83 modern awards) and or the terms of their employment contract.
An employee should be given eight weeks written notice but no more than 12 months’ notice of forced leave. In circumstances where leave is required the leave must be at least one week. Employees cannot use personal leave as annual leave as these are two separate entitlements and under the NES cannot be traded off.
Another option to reduce liabilities is for employees to “cash out” their annual leave. An employer can’t pressure employees to do so and if agreed the agreement must be in writing. Any payment must be made at the same rate as if the employee was taking leave.
The potential exposure of accumulated annual leave highlights the need for correctly drafted employment contracts. At Everingham Solomons we have the expertise to advise you on the terms of modern awards and the drafting of employment contracts.
The team at Everingham Solomons wishes everyone a safe and Merry Christmas and we look forward to helping you in 2018 because, Helping You is Our Business.
Click here for more information on George Hoddle.