Have you ever fretted about the financial implications of all the accrued leave on your books? If for instance an employee decides to quit, how would you be placed if they request to take annual leave as part of final payment? Or if a staff member wants to take their built-up holidays in one go? You can see it has the potential to leave a business owner in a significantly vulnerable position. There are no silver bullets to this problem – and it really is a problem now at the end of 2022 more than ever.
Have you ever wondered if there was anything you could do about reducing that liability? In this post, we will be discussing whether you can force an employee to take annual leave, and provide suggestions on how to handle this tricky situation.
Entitled and Accrued Annual Leave
Every employee in New Zealand – aside from casual employees and some fixed term employees – gets at least four weeks of paid annual leave each year. This time is intended to give staff a chance to rest, and relax away from work.
Although employees start accruing leave from their first day of work, the entitlement to take annual leave in NZ comes into effect after 12 months of employment, unless you allow employees to take leave in advance of its accrual.
How to Discuss Forced Annual Leave
At FixHR we always recommend business owners reach out directly to staff and have a free and open conversation about leave in the first instance. It may not be the big deal you could be imagining. Making time for a good-natured chat about the accrued leave could resolve the issue; after-all most issues can be solved with an amicable discussion. Genuinely having a desire to reach a mutual resolution that works well for you both is the best way to approach the tricky subject of excessively accrued annual leave.
Can I Force an Employee to Take Their Annual Leave?
There are two instances in which an employee can be forced to take annual leave. If you find that you and your employee can not come to an agreement on when the annual leave is to be taken, you have the right to require them to take their leave. You must give 14 days’ notice to the employee for this to be legally compliant.
The second way of forcing leave is to regularly closedown for a particular period every year. (Please note, you are required to give 14 days’ notice in this case as well.)
Get on it
So you can direct an employee to take their annual leave. Please note, this direction must be in a written form, such as an email or letter, and allow at least 14 days’ notice. As a business owner, it’s important to handle excessive annual leave sooner rather than later. Addressing cash-flow vulnerabilities in the business is a priority. The other risk we are attending to here is being short-staffed if employees decide to take their leave in a long chunk, or if more than one hands in their notice at the same time.
Prevention is better than Cure
Encouraging your employees to take long weekends off or short mini-breaks can help your business avoid a bottle-neck of leave requests over Christmas. This technique also ensures that financial liabilities are being managed and reduced. It can also go some way toward maintaining productivity throughout the year. Employee mental health is boosted with well-deserved time off from work. Remember talking to employees is the first step to finding a mutual agreement over any excessively accrued leave.
If you need advice you can trust on this issue, feel free to contact FixHR with issues of leave and other entitlements. It can help to have a third party to refer to and “blame” for requests or requirements your staff may not feel excited about. At the very least, check out our previous blog on Closedowns and Annual Leave here.