How to prevent your employees from accruing There’s no doubt about it – employees who accrue massive amounts of annual leave can be a huge burden on your business. Why? Because the more accrued liability builds up, the more it can cause your business to have significant cash flow problems. But there are ways you can combat this… Here are 4 things you can try: 1. Direct your employees to take annual leave – even if they don’t want to! Under the National Employment Standards in the Fair Work Act, you can direct employees to take annual leave if it is reasonable to do so. However, if you are subject to an award or enterprise agreement, you will need to check whether you have this right. 2. Shut down part or all of your business You might be able to implement a ’shut down’ of all or part of your business, e.g. the sales department or the warehouse. You can maintain skeleton staff during a shut down for safety reasons, provided that the business or part of it is not actually operating. If the Fair Work Act applies to you, employees must take accrued annual leave during a shut-down period – even if they don’t want to. 3. Cash out leave Under the National Employment Standards in the Fair Work Act, you may reach an agreement with an employee to cash out a certain amount of their accrued paid annual leave. However, if the employee is covered by an award or enterprise agreement, the relevant instrument must include a term that allows this to occur. 4. Pay for annual leave in advance If you do not have the right to cash-out leave you may be able to pay for annual leave ‘in advance’. This can occur on the basis that this amount will be deducted from any annual leave payment made to the employee upon the termination of their employment. If you decide to do this, you may wish to reach an informal understanding with the employee that they will not take the leave they were paid in advance for. The Employment Law Practical Handbook will show you exactly what you can do to stop your employees from accruing too much annual leave – but that’s not all the handbook can help you with. Here’s just a quick sample of more practical information you’ll find in chapter L3 Annual Leave:
too much annual leave
