Can an employer refuse an annual leave request in Australia? The short answer is yes, but only if the refusal is reasonable under the Fair Work Act.
Who doesn’t love annual leave! Whether it’s sitting by a pool sipping cocktails, skiing down a mountain rejoicing in a fresh dusting of snow. Or exploring a new country and absorbing all that the local culture has to offer. Without doubt, holidays are vital to both physical and mental wellbeing and of course you want your employees to be happy and healthy.
Most of the time, it’s a no brainer to approve leave, but managing annual leave requests can become challenging. Especially during peak business periods, school holidays, or staff shortages. That’s why it’s important employers understand both their legal obligations and best practice approach when deciding whether to approve or refuse annual leave requests.
When can an employer refuse annual leave?
First up, annual leave is outlined under the National Employment Standards as a right that all full and part time employees have, accruing at 4 weeks per year (pro rata for part time workers) and eligible shift workers earn five weeks per year.
The Fair Work Act does not stipulate any minimum or maximum amount of annual leave an employee must take each year; however, the business has the right to specify this in their annual leave policy. Some businesses really don’t have many rules around this, but others do.
One of our clients for example, incudes in their policy that they encourage all employees to take all four weeks of annual leave each year, for appropriate R&R. However, if an employee doesn’t wish to do this, the business can only enforce use of annual leave in line with their relevant Award or EBA.
Some awards stipulate that you can only direct an employee to take a period of annual leave if they have accrued more than 8 weeks of leave and further require you to provide an employee with 8 weeks’ notice that they must take a period of annual leave.
Of course, it is always best to consult with the employee to come to a mutual agreement on use of leave, because some people may choose to save up some of their time and take off for an eight-week overseas jaunt.
But key takeaway - have an annual leave policy!
What Is a Genuine, Sound Business Reason to Refuse Annual Leave?
You can refuse an annual leave request, but the Fair Work Commission has confirmed that you must have a genuine, sound business reason. Genuine, sound business reasons to refuse an annual leave request might include:
- other employees, which will leave the business short staffed
- The operational requirements of the business during the leave period, for example, a finance manager requesting leave at the end of June (EOFY) may not be viable operationally
- Whether the leave would cause a detriment to the business;
- Whether the employee gave reasonable notice
- Whether the employee followed you’re annual leave policy and procedure
How Do Employees Request Annual Leave in Australia?
Cedric has popped an annual leave form on your desk. He wants two weeks off during the busiest time of year. You really need all hands-on deck. Can you refuse the request?
If you have a block-out period that correlates with Cedric’s leave timing and you have a clear and well communicated policy in place, you could decline the request. But if Cedric is wanting to travel because his only daughter is getting married in Italy and she has plans for the whole family to celebrate and enjoy some of the sights together, is it really a wise decision to refuse the request? You need to overlay the decision with some understanding. Regardless of your policy, you should always consider the merit and circumstances of each individual request.
But what If Cedric simply wants to slip over to Bali because he’s taken up big wave surfing? You weigh it up. Does it suit the operational needs of the business? Realistically, there should be flexibility in big wave surfing dates but there isn’t when it comes to your busy period. You really need him at work during this period, so you can refuse the request. But have a chat with him as to why you can’t approve leave for that period and work with him to find alternate dates that suit you both.
In situations such as these, communication and a well written policy will save a lot of heart ache!
Can an Employer Refuse Annual Leave During a Block-out Period?
Yes. If you have communicated this in your annual leave policy and the your block out dates aren’t unreasonable. For example, making 10 months of the year block out periods, is not fair or reasonable! Explain to the employee the reason you have the block out period and work with them to determine suitable new dates for both of you. Again, please consider the individual circumstances of the request, such as Cedric's daughters wedding!
Can an Employee Request Annual Leave if They Have No Accrued Paid Annual Leave?
Here comes Josie with an annual leave request. It’s not in the block-out period and it doesn’t conflict with anyone else in her team. You will still have boots on the ground to cover her work in her absence. But she doesn’t have any accrued leave up her sleeve.
You have the option to grant her unpaid leave or let her entitlements fall into a negative leave balance. This can be risky as she could resign without having rebuilt the accrual. You may struggle to recoup the cost of the paid leave.
You also have no obligation to approve leave in this situation and can absolutely refuse the request. Apart from a long term period of sick leave, employees do not have any entitlement to a period of unpaid leave.
Best Practice for Managing Annual Leave Requests as an Employer
Everyone needs a break from the daily grind of work. We recommend that all employees make use of their leave entitlements to get away from it all. Including owners and business leaders. Research shows that holidays relieve stress, boost immunity and improve overall health. They improve motivation and productivity and can even improve staff retention
Encourage your team to access their leave entitlements. Keep in mind that if you have a shutdown period, you cannot force an employee to take a period of unpaid leave if they don’t have enough accrued paid leave to cover the shutdown. You need to account for this when approving leave.
Ensure you have a robust policy in place. One that clearly outlines block out and shutdown periods as well as the required process for annual leave applications. And finally, remember that if you are going to refuse a leave request, you need a genuine, sound business reason. You should always discuss the request and denial with your employee to ensure that disengagement doesn’t occur.
As always, our experienced and knowledgeable HR Consultants are always here to answer any questions you have. Contact us if you have any questions on how to manage a challenging annual leave situation!
FAQs on Annual Leave
No. Under the Fair Work Act, an employer must not unreasonably refuse an employee's request to take annual leave. Any refusal must be based on reasonable grounds. General inconvenience is not sufficient.
However, a reasonable reason to refuse is if a person has not followed any specific company process for an annual leave application. This is why it's important to have a robust policy in place outlining notice requirements and any limits around extended leave periods.
It depends. Staffing levels are considered as part of the operational requirements of the business, which is a relevant factor in deciding whether a refusal is reasonable.
However, the impact must be genuine. A minor inconvenience won't justify a refusal. You may include in your policy that only one person per department can be on leave at the same time. This helps with managing employee expectations about leave request approvals.
Yes, in many cases. Block-out periods during Christmas, Easter, and peak trading times have been upheld as reasonable by the Fair Work Commission, particularly for retail and hospitality businesses.
However, a documented policy must be in place advising employees of the block out periods. Each leave request should still be considered on its own merits and with regards to the employee's circumstances.
Yes, Insufficient notice can be a valid reason to refuse a request.
The process for requesting annual leave, including how much notice is required, should be set out in your workplace policy. Employers should ensure the rules around annual leave requests are clearly communicated to staff.
Generally no, but exceptional circumstances might apply.
We recommend consulting with the relevant employee on the possibility and if the employee agrees, and then encounters any costs associated with cancelling (flights / accommodation etc) it is reasonable for the employer to reimburse these.
It is generally ill advised to cancel someone’s approved leave unless there really are exceptional circumstances. If the employee doesn’t agree, there can be a genuine dispute, and also risk of disengagement.
