December 30, 2018

Annual leave tips for workers at your startup

Updated: 8 December 2019

Australian National Employment Standards allow annual leave for employees. In this article, I explain these entitlements.

Understanding employee entitlements can save you headaches when you hire workers. 

So here's what you need to know about annual leave for your workers. 

1. Australian employee annual leave entitlements

Firstly, for each year of service at your startup, your employees are entitled to 4 weeks of annual leave.

And if they they don't use that leave, it accrues to the following year. 

Now, the calculation of annual leave is based on your employee's ordinary hours of work.

Also, if your employee leaves before a year is up, they are entitled to be paid for unused annual leave that accrues until the day their employment ends.

A written policy for taking annual leave is useful because It can help you manage a backup or work-around solution while your worker is away.

2. When can employees take annual leave ?

Leave is taken at a time agreed by you and the employee. And as the employer, you must not unreasonably refuse leave. 

3. Can employees cash out their annual leave ?

You can agree to your employee cashing out an amount of their annual leave. As long as the employee will be left with a minimum of 4 weeks leave.

Also, you'll need a separate agreement for each request to cash out leave.

4. Loading

If loading applies, because of a term in the worker's employment agreement, enterprise agreement or award, this will need to be paid to the employee. 

Further, leave loading is typically 17.5% in many Australian Awards.

5. Shut downs

Full-time and part-time employees have to be paid their usual wages during a shut down unless their award or agreement says otherwise.

Casual employees don’t have to be paid during shut downs.

If your award or agreement doesn’t say anything about shut downs or directions to take leave, you can’t force employees to use their leave.

You can negotiate with them to take paid or unpaid leave but if they don’t agree you can’t force them.

Key points

Full time workers are entitled to 4 weeks annual leave. 

Annual leave can be cashed out as long as the worker will be left with a minimum of 4 weeks annual leave. 

Check any applicable awards for shut down periods. If in doubt, get advice.

Do you have questions or comments about annual leave? Be sure to leave them below.

About the author 

Vivian Michael

As founder and lawyer at Michael Law Group, Vivian advises Australia's top entrepreneurs on business and employment matters. Clients benefit from Vivian's commercially focussed and pragmatic legal advice, business experience, and commitment to deliver the best quality business legal services to her clients.

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