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When Can I Force An Employee To Take Annual Leave?

Published October 05, 2021 - [email protected]
business owner confident in her knowledge of annual leave hoarding

With the pause to international travel, the closing of state borders, and long restrictions to regional travel, excessive annual leave build-up is becoming a common worry for employers. These 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. 

“Employers should urge their staff to take time off over the next two months or risk leave accrual exploding out of control,” said Employsure employment relations specialist Joshua Paterson. 

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), it’s 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 of its accrual.

How to Discuss Forced Annual Leave

As a business owner, it’s always favourable you reach out to your employee in the first instance. 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 agreement together, (that’s best for both of you) is the best way to approach the tricky subject of excessively accrued annual leave. 

How Do 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 just cannot agree on when the annual leave is to be taken, you can force the employee to take their leave. You must do this with 14 days’ notice to the employee to be legally compliant.  You can also make employees take leave if you regularly closedown for a particular period every year, (remembering to give 14 days’ notice in this case as well).

Forcing an Employee to Use Excessive Annual Leave

So you can direct an employee to take their excessive annual leave.  Just remember the direction must be in a written form, such as an email or letter 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).  If you need HR advice you can trust on a specific issue, well that’s what we do best, we support business owners with their HR concerns. And remember we offer 24/7 free initial advice, so feel free to call for a chat to see how we can help.

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 once borders are open. 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 excessively accrued leave.

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About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small- and medium-businesses, with over 30,000 clients in ANZ. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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