How well do you understand employee leave entitlements and how can you best manage them?
Over the period of an employee’s employment, they will need to take leave from the business for a variety of reasons. There is a range of leave types, with different entitlements and accessibility, which employers and prospective employers need to understand in order to meet legal obligations.
Leave is time allowed away from work, generally requested in writing, by an employee to cover special circumstances occurring in the employee’s life. It might be voluntary, mandatory, paid, or unpaid and it might be accrued or per occasion.
Leave and entitlements are covered by applicable awards, enterprise agreements and other registered agreements. Such instruments can’t offer less than the National Employment Standards but they can give more leave.
Let’s take a look at each type of leave.
Annual Leave (or holiday leave) allows an employee to access paid leave while having time off work. Full-time and part-time employees get 4 weeks of annual leave, based on their ordinary hours of work. Refer to your award if you have shift workers as they may be entitled to more.
Annual leave is accrued from the first day of employment, even if an employee is in a probation period. The leave accumulates during the year and any unused annual leave will roll over from year to year. An employee accrues leave when on paid leave, however periods of unpaid leave does not accrue leave entitlements.
Under some awards and registered agreements, employees can request to cash out annual leave instead of taking time off work.
Sick and Carer’s Leave (or personal leave) allows an employee to access paid leave while taking time off to help them deal with personal illness, caring responsibilities and family emergencies. Full-time and part-time employees get 10 days of sick/carer’s leave, based on their ordinary hours of work.
Sick and carer’s leave can be applied upfront or accrued from the first day of employment, even if an employee is in a probation period. Any unused leave will roll over from year to year. An employee accrues leave when on paid leave, however periods of unpaid leave does not accrue leave entitlements.
An immediate family member or household member is a; Spouse/partner (and former), de facto partner (and former), child, parent, grandparent, grandchild, siblings or anyone living with the employee. This definition includes step-relations as well as adoptive relations.
Family and Domestic Violence Leave allows an employee to access unpaid leave while taking time off to manage family and domestic violence matters as laid out in the National Employment Standards. All employees including casuals are entitled to 5 days of unpaid leave each year.
Family and domestic violence refers to violent, threatening or abusive behaviour by a close relative to an employee that seeks to coerce or control the individual or cause them harm or fear.
A close relative is a; Spouse/partner (and former), de facto partner (and former), child, parent, grandparent, grandchild, siblings. This definition includes an employee’s current or former spouse or de facto partner’s; child, parent, grandparent, grandchild or sibling, or a person related to the employee according to Aboriginal or Torres Strait Islander kinship rules.
Compassionate Leave (or bereavement leave) allows an employee to access paid and unpaid leave when a member of an employees immediate family or household dies or contracts or develops a life-threatening illness or injury.
Full-time and part-time employees are entitled to 2 days paid leave and casual employees are entitled to 2 days unpaid leave each occurrence. This leave can be taken in a single continuous period or over two separate days. Employees should know who to notify as soon as they can, along with the period of leave they expect to take.
Parental Leave (or maternity and paternity leave) allows employees to access paid and unpaid leave to provide care for the birth or adoption of a child.
All employees are entitled to 12 months of unpaid parental leave after the individual has completed 12 months of service. They can also request an additional 12 months of leave. Casuals can also be entitled to unpaid parental leave if they have been working regularly with your business for at least 12 months and they planned to continue to work with your business, regularly if it had not been for the birth or adoption of a child.
Australian Government Parental Leave Pay Scheme (PLP) allows employees who are eligible to access paid leave to provide care for the birth or adoption of a child. All eligible employees can access 18 weeks of paid leave at the National Minimum Wage.
Dad and Parter Pay allows working dads and partners (including same-sex partners) access to paid parental leave. All eligible employees are entitled to this leave and can access 2 weeks paid leave at the National Minimum Wage. These payments are made directly to the employee by the Australian Government whilst the employee takes leave without pay.
Community Service Leave allows employees to access leave to participate in voluntary emergency management activities, defence service and jury duty including jury selection.All employees are entitled to take leave. With the exception of jury duty, community service leave is unpaid and the employee is entitled to take leave for as long as they are engaged in the activity. Please note that Defence Reservists have additional workplace protections under the Defence Reserve Service (Protection) Act 2001.
Long Service Leave allows employees to access paid leave while having time off work.All employees become entitled to this kind of leave after a long period of continuous service for their employer, typically 10 years, however in some instances after 7 years. Refer to your state and applicable awards for further information about access and management of long service leave.
Whether you have one member of staff or many, employers need to know what entitlements (paid and unpaid) employees can access, whether they are covered by the national employment standards, or by an applicable award and how to administer each type of leave.
Tips for managing leave.
In addition to the various types of leave outlined above, employees are also entitled to access public holidays. Full-time and part-time employees are entitled to be absent from work on a public holiday and are paid their base rate. If a part-time worker doesn’t work that day, they are not eligible for the public holiday. Make sure you refer to an applicable award about the rules around working and not working on public holidays and applicable penalty rates.
Applying for leave
As a business you should decide how employees can apply for leave and what notice period is required.
Employees should be provided with an overview of leave, including leave types and entitlements, how much leave they can take at any one time, when leave balances are deemed excessive that forced leave will be required and if there are certain times they are not able to take leave based on the way your business operates.
An example – Your business may have a shutdown period over Christmas/New Year. Employees need to understand this, know about their accruals and your procedure about negative leave or unpaid leave in relation to this period.
For leave types where notice is not possible, employees need to advise the nature of their leave to determine the leave type and expected period of absence as soon as possible.
Asking for evidence
You can also request evidence around the reason for unplanned leave types including sick leave (medical certificate) and compassionate leave (death or funeral notice), however, this evidence must be reasonable. An award or registered agreement may detail terms around evidence. If the employee doesn’t provide the requested notice or evidence they may not get compassionate leave.
Some leave is accrued and balances need to be calculated and shown on payslips, such as annual and sick/personal leave. Requests for leave should be received in writing and saved on an employee file or in an electronic payroll system / employee self service.
Additional Leave or entitlements
As a business, you may decide to offer more than prescribed in the National Employment Standards and applicable awards. This includes additional paid or unpaid leave entitlements, and extending compassionate leave for non-immediate family members or non-household members, on agreement.
In addition to normal entitlements, as a business, you may decide to offer more variety in the types of leave that can be taken. This includes offering such leave as study leave, birthday leave, leave to move house and even pet leave.
These offerings can boost their employee benefits for new and existing employees, making the business an attractive employer.
Managing excess leave balances
Under some awards and registered agreements, employers can direct employees to take paid annual leave and long service leave if they have a lot of leave.
An employer can reasonably refuse a request for annual leave or long service leave if it does not meet the needs of the business (ie. the employee is requesting time off during your busiest time or other employees are away at the same time), the employee has not provided adequate notice, or they do not have sufficient leave entitlements.
Long term absenteeism
Absenteeism is an employee’s continual or habitual absence from work. If an employee is routinely absent from work, it is best to act immediately before it results in lack of productivity for your business.
Paying out leave entitlements on termination
When processing an employees’ final pay, regardless as to why the employment came to an end, there are some leave entitlements which need to be paid out include annual leave and long service leave.
Whatever your business situation, it is important to understand your employees leave entitlements and correctly accrue and pay these entitlement. Talk to us at Small Business Society to find out how we can help you.
The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.
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About Kate Tongue
Kate Tongue is the founding Director of Small Business Society.
She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.
Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.
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