Large unused amounts of employee annual leave can add huge financial strain onto small businesses that they cannot afford in the long run. If for instance an employee decides to quit, desiring to take annual leave as part of final payment, or they want 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.
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.
What is excessive annual leave?
Every employee in New Zealand gets at least four weeks of paid annual leave each year, (that’s aside from casual employees and some fixed term employees), Annual leave 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 wish to allow employees to take leave in advance.
How to discuss forced annual leave
As a business owner, it’s always favourable that you reach out to your employee in the first instance. Making time for a good-natured chat about the leave entitlements could resolve the issue, as most issues can be solved with an amicable discussion. Genuinely having a desire to reach a mutual agreement together, is the best way to approach the delicate subject of excessive annual leave entitlement.
How do I direct an employee to take their annual leave?
If after you have consulted with your employee and you just cannot agree on when the annual leave is to be taken, then you can direct the employee to take their leave. You must do this with 14 days’ notice to the employee to be legally compliant. You can also require employees to take annual leave if you regularly closedown for a particular period every year, (remembering to give 14 days’ notice in this case as well).
Directing an employee to use excessive annual leave
A direction to take annual leave must be in a written form, such as an email or letter, providing the employee with 14 days’ notice. As a business owner, it’s important to handle excessive annual leave sooner rather than later, as this heavily built-up leave can be a financial liability. It can leave you short-staffed if employees decide to take their leave in a long chunk, or if they hand in their notice, (cashing out the annual leave).
Next steps
Encouraging your employees to take long weekends off, even short mini-breaks can help your business avoid a bottle-neck of future leave requests. This may reassure you as a business owner that financial liabilities are being reduced, and that productivity is maintained as 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 excessive unused annual leave entitlements.
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