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  • Writer's pictureStreamlineHR

March IR Insights: Managing Annual Leave

With Christmas a long distant memory and the next round of school holidays and the Easter Break on the horizon, now is a great time to review your leave balances.

While we all have those team members that take their leave as soon as it becomes available, some of you may have a handful that sit on their excessively high leave balances and never take a break. There are a few reasons you should be managing the leave balances of your teams:

  • Legislative Requirements: In both Australia and NZ, generally (with a few exceptions of course) permanent employees are entitled to 4 weeks annual leave/holidays per year. In Australia this is pro-rota for part-time employees and starts accruing as soon as an employee commences. Whereas in NZ, your team members become entitled to this once they have been with you for 12 months.

  • Opportunity to Recharge: With the new Right to Disconnect legislation coming into play in Australia later in the year, and the rise of Psychosocial Hazard awareness, you should be doing all you can to encourage your team members to take regular breaks from work to rest and recharge.

  • Better Cash Flow: If an employee has been sitting on their leave balance for several years, you will be paying their leave at the current hourly rate of pay (or salary) and not the salary they were on at the time the leave accrued.


So, what can you do if your team member doesn't want to take annual leave?

  • Have a conversation and encourage them to book it in. Ask them if there is a reason they are not taking leave e.g. are they planning on taking a long overseas trip, or do they have a wedding coming up? At that point encourage them to book in their leave to ensure it will be approved.

  • Consider the leave balance the employee has available – is it excessive?

    • In Australia, most Modern Awards contain provisions about what constitutes 'excessive' leave, when an employer may direct an employee to take annual leave, and where an employee can request to cash out some of their leave entitlements.

    • For our Kiwi counterparts, things are a little simpler – you can make your employees take annual holidays if agreement is not able to be reached, by providing 14 days’ notice. Employees may also opt to cash in one week of holidays each entitlement year.

  • Is the reason due to workload, or are they dreading returning from leave to a mountain of 'urgent' work? If so, there are bigger issues at play. As the employer, it is your responsibility to ensure there are no barriers stopping your team from taking a well-deserved break.


Reach out to Streamline HR if you need more specific information regarding your obligations, and the process. In the meantime, here's to happy holiday planning!


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