T’is nearly the season for all the annual leave forms to come flooding in, tra la la la la la la la la. Not everyone wants to take time off at Christmas, but this is a good time to have a proper conversation about the approval of leave and what leaders should be thinking about when approving leave requests.

Why a Clear Annual Leave Policy Matters

Managing the approval of leave can be a challenging part of running a business. Employees have the right to take time off to recharge, while employers need to make sure operations continue smoothly.

Without doubt, the HR Staff n’ Stuff team will always recommend having a well-written annual leave policy in place.

But of course we would say that… we’re HR consultants and we love a good policy.

An annual leave policy isn’t just a nice-to-have. It’s a business necessity. Without it, confusion, frustration, and tension can creep in quickly.

Here’s why it matters:

Consistency and fairness

A policy ensures consistency when approving leave. It reduces perceptions of favouritism and helps leaders make fair decisions across the board.

Operational planning

Businesses need to manage capacity, especially during peak periods like holidays or EOFY. A clear process for approving leave helps avoid gaps.

Employee confidence

When employees understand how leave approval works, it reduces uncertainty and unnecessary stress.

Key considerations when approving annual leave requests

When it comes to approving or rejecting leave requests, leaders must weigh several factors. Balancing the needs of the business with employees’ desires for time off can be tricky, especially when multiple requests come in for the same period. There  are different approaches you could utilise:

1. First-in, best-dressed

This approach prioritises whoever submits their request first. It’s simple and transparent, but not always practical.

• Employees who may be slower to submit leave requests, perhaps due to personal circumstances or uncertainty about their own plans, may feel disadvantaged.
  
• If all your key staff submit leave requests at the same time and are approved based on this approach, it may leave the business exposed with inadequate staffing levels.
  
• No consideration is given to priority needs. For example, one employee may have a family wedding overseas and has no control over the dates but the employee who jumped in first was simply booking a beach holiday that may be easily adjusted as flights aren’t yet booked and the timing isn’t dictated by external forces such as school holidays and weather conditions. 

A better approach is to use this as a guide, not a rule.

2. Fairness and equality in approving leave

It’s important that managers consider fairness when approving leave. For instance, if one employee always takes leave during the Christmas period, while others miss out year after year, resentment and frustration can build. Implementing a rotating system for high-demand periods, such as public holidays, can help balance this.

3. Business needs must come first

As much as employees deserve time off, the business must continue to operate. A manager’s primary obligation is to ensure the company can still meet the needs of its clients and continue operations. Before approving a leave request, it’s crucial to assess:

• Staffing levels: Can the business function effectively without the employee?
  • If multiple people from the same team are on leave simultaneously, will that impact the quality of service or delay important projects?
  • Does your policy dictate the number of people from the same team that can be on leave at the same time?
  • Can you maintain productivity or will this place too much pressure on the remaining team members which will in turn take a toll on morale?
• Peak periods: During busy seasons, like tax time for accounting firms or the holiday rush for retailers, approving leave can be risky. You can absolutely set blackout periods where approving leave is restricted. Just make sure this is clearly outlined in your policy.

4. Communicating When You Don’t Approve Leave

Saying no is part of leadership.

When you can’t approve leave, how you communicate matters just as much as the decision itself.

Be clear, upfront, and explain the business reasons. If employees understand why, they’re far more likely to accept the outcome.

This is where having a policy helps. You’re not making it up on the spot. You’re applying a consistent process.

When Sick Leave Follows a Rejected Leave Request

A trickier situation is when an employee has their leave request declined… and then suddenly calls in sick for the exact same period.

You need to balance trust with accountability here. Employees are absolutely entitled to personal leave when they are genuinely unwell, and you must respect that. But you also can’t ignore potential misuse of leave.

If you’re unsure where the line sits, have a read of our guide on personal leave and what employees are actually entitled to.

Before you jump to conclusions, follow due process.

This is where a well-written policy does the heavy lifting. If you’ve clearly outlined your right to request evidence, including medical certificates, you’re in a much stronger position to manage the situation properly.

If you start to see a pattern, for example repeated sick leave after declined leave requests or around long weekends, it’s reasonable to look into it further. Patterns matter. Document them.

When it comes to suspected misuse, don’t rush into disciplinary action without evidence. That’s where things can unravel quickly.

Instead, focus on a couple of key steps:

Documentation
Keep clear records of both approved and declined leave requests. That paper trail becomes critical if you need to investigate potential misuse of personal leave.

Medical evidence
Request a medical certificate where appropriate. As an employer, you can ask for evidence for as little as one day off. If an employee doesn’t provide it when requested, they may not be entitled to payment for that leave.

A medical certificate might be easy to obtain, but it still needs to satisfy a reasonable person. If the timing raises concerns, it’s perfectly reasonable to seek further clarification from the treating practitioner.

At the same time, don’t lose sight of the fact that there could be a legitimate reason. The timing might be unfortunate, but not dishonest.

Stick to your process. Follow procedural fairness. And if you’re not confident navigating that, get advice before you act.

While it is natural to be suspicious about someone calling in ill at the exact period that an annual leave request was rejected, there might be a legitimate situation occurring. You need to follow due process and allow for procedural fairness so if you are unsure of how to do this, please contact the HR Staff n’ Stuff team for support.

It’s Not About Being Liked

Leadership isn’t a popularity contest. Sometimes approving leave means saying yes. Sometimes it means saying no.

For example:

You approved Jane’s leave six months ago. Flights booked. Accommodation paid Now George wants the same dates for a surf trip. That’s a no.

But if George needs the leave for a wedding overseas, now you’re dealing with a different situation. That’s where flexibility, planning, and problem-solving come into play.

You might:

• Bring work forward
• Upskill another team member
• Arrange short-term cover

The approval of leave isn’t always black and white. But consistency and communication will always guide you.

Best Practice for Approving Leave Without the Drama

The best way to avoid conflicts over leave requests and prevent misuse of sick leave is by implementing proactive strategies. Here are a few tips:

Set expectations early
Make sure everyone understands how leave approval works.

Encourage forward planning
The earlier requests come in, the easier they are to manage.

Be flexible where possible
If it doesn’t impact the business, say yes.

Rotate high-demand periods
Don’t let the same people lock in the same dates every year.

Keep communication open
A shared leave calendar can prevent clashes before they happen.

Be consistent
Nothing damages trust faster than inconsistency in approving leave.

Managing annual leave can be a complex balancing act, but with the right policy and approach, it doesn’t have to be a source of stress for you or your employees.

Set clear policies, be fair, and stay flexible where you can. That’s how you balance the needs of your team and your business. And if you suspect sick leave misuse, stick to a clear process so you protect the business without overstepping on employee rights.

If you need help reviewing your policies or managing tricky leave situations, HR Staff n' Stuff can help - contact us to discuss.

FAQs About Approving Leave

Can an employer refuse annual leave in Australia?
Yes. Employers can refuse leave requests if there are reasonable business grounds, such as staffing shortages or peak periods.

Do employers have to approve leave on a first-come basis?
No. While “first-in, best-dressed” is common, employers can prioritise based on business needs and fairness.

Can you set blackout periods for leave?
Yes. Employers can restrict approving leave during critical business periods, as long as this is clearly communicated.

What if an employee calls in sick after leave is rejected?
You should follow due process. Request evidence if appropriate and assess patterns before taking any action.

How do you make leave approval fair?
Use a clear policy, apply it consistently, and consider rotation systems during high-demand periods.