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Recently we looked at when you can direct an employee to take annual leave. In this article, we will look at the other side of the equation: When can an employer refuse an annual leave request.

All employees (other than casual employees) are entitled to paid annual leave. This entitlement to annual leave is spelled out in the Fair Work Act and the National Employment Standards, as well as individual industrial awards and agreements.

Regular employees are entitled to four weeks annual leave a year, and shift workers are entitled to five weeks annual leave per year. This leave accumulates from the first day of employment, and if not used during a year, the entitlement rolls over from year to year.

On What Grounds Can An Employer Refuse Annual Leave?

The Fair Work Act says that an employer must not unreasonably refuse to agree to a request by the employee to take their paid annual leave.

Details of what constitutes reasonable grounds for refusal are often spelled out in the relevant award that covers the employee. You can also spell out your process in your HR Policies and Procedures Manual.

Some examples of the types of things that could be taken into account when you consider whether to refuse annual leave:

  • The length of time of the leave request.
  • The business requirements during the time of the leave request (e.g. is it the week before Easter and the peak hot-cross bun time for bakers and there are no casual bakers available that could be rostered to cover the leave).
  • Whether the leave, if granted, would create a problem for the business (e.g. an IT project of which the employee is an integral part, is due to go live during the period of the leave request).
  • Whether reasonable notice of the request was given so that cover could be organised.
  • The amount of leave the employee has accrued.
  • When the employee last went on leave.
  • If other people already have leave approved for the same period and granting additional leave will create problems covering operational requirements.
  • If the employee always takes school holidays off, which stops other staff who also want leave over school holidays from being able to take time off.

Can Approved Annual Leave Be Cancelled By An Employer?

What happens when you have approved annual leave for an employee, but something changes in your workplace, and you now need them to work?

This happens remarkably frequently in business: new projects are landed, key personnel resign, critical project deadlines are pushed out and now takes in a period when leave was approved for an employee.

Employers have no unilateral legal right to cancel leave that has already been approved. However, with the employee’s consent, you can cancel or adjust the periods for the leave.

The keyword here is consent. You cannot force or coerce the employee to cancel their holidays to suit your business.

If you covertly or overtly force the employee to cancel their leave, you could see yourself before the Fair Work tribunals for a general protections claim as the employee was prevented from accessing a workplace entitlement.

Cancelling approved leave comes at a significant emotional and financial cost to the person and could jeopardise their ongoing commitment to your business. This is not a decision any manager should take lightly, and you should exhaust every other possible option first.

If you find yourself in the situation where you genuinely need the employee to remain at the office, consider if the employee will be out of pocket for any cancelled or rescheduled holiday plans and reimburse them all the financial costs.

The other thing to remember, is that holidays often involve more than just one person, so cancelling plans may impact on family and friends of your employee. They may not be able to cancel their holiday arrangements to fit in with your business, which means that your employee may not be able to take a break with their loved ones this year. This could create issues with your employee and affect their willingness to remain with your company.

HR Tips for Approving Leave

Annual leave is an employee entitlement and needs to be treated with openness and transparency with all employees.

  • Always review all leave applications promptly. Don’t let application sit in your in-tray for weeks at a time in case something comes up. Be considerate to your employees need to plan their activities during a break. Also remember that delaying approval/refusal has been found by Fair Work to be an unreasonable action and has penalised workplaces for the delay.
  • Ensure leave approvals over in-demand times (e.g. school holidays) are equitably shared amongst employees.
  • If you need to refuse an application, do so in a timely manner and in writing, stating the reasons for the refusal. Always meet with the employee to discuss the reasons in-person to ensure there is a clear understanding of the reasons.
  • Think very carefully before requesting an employee cancel already approved leave. The long-term impact on your business of the short-term solution may not be worth the pain.
  • If the employee agrees to cancel their leave at your request, ensure you pay for any out-of-pocket expenses incurred by the cancellation.
  • If you have a leave block out period in place (e.g. no holidays over our busiest time of the year – Christmas), seriously consider granting an exception if the person gives you a significant amount of notice. It is hard to argue before the courts that no-one could be rostered to cover shifts if you have six months’ notice!

 

Not sure of your rights or responsibilities? Contact the Fair Work Ombudsman on 13 13 94.

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Ingrid Moyle

HR Author and Lecturer with over 25 years' experience in human resources and workplace relations in Australia. Lead Author of Instant HR Policies & Procedures, NDIS Direct Employment HR Manual, and Employee Performance Reviews: Tips, Templates and Tactics.