By Brigitta Poulos

It’s not often annual leave and notice periods collide, but when they do employers must know what to do. Balancing each employment entitlement and ensuring that both the employee and the business are abiding by the rules is vital. With leave balances at all-time highs coupled with record-low unemployment, employees are accessing their leave entitlements whenever they get the chance.

Some of the most difficult situations arise when different employment entitlements overlap with one another. One such situation is where an employee has booked annual leave or wishes to take annual leave, during their notice period.

This scenario raises the question; can annual leave be taken during an employee’s notice period? Here our experts explain what annual leave is, when it can be taken, and what businesses must be aware of when it comes to this leave entitlement.

Permanent full-time and part-time working Australians are entitled to four weeks of annual leave every year, so when can this entitlement be taken?

The general principle is that annual leave must be taken by mutual agreement. Except for certain rules relating to excessive leave balances and annual shutdowns, annual leave must usually be consented to by both the employer and employee.

This means that if both parties agree, there’s no problem with employees taking annual leave as all or part of their notice period.

However, an employer cannot force an employee to take annual leave while they’re working out their notice period. Receiving notice of termination is a legal entitlement, and it can’t be avoided by making employees take their annual leave.

Arguably, this also applies to scenarios where annual leave has already been arranged before an employer-initiated termination, resulting in some or all of the notice period overlapping with the pre-agreed period of annual leave. In these cases, we would recommend that the employer offers for the employee to withdraw the annual leave in recognition of the changed circumstances, if the employer would prefer that the employee work out their notice period in order to assist with handover or other tasks. However, since the pre-arranged annual leave has already been accepted, if the employee does not agree to withdraw it, then the employer is unable to force the employee to do so.

After receiving notice of termination, an employee may wish to apply for annual leave instead of working out their notice. An employer may choose to refuse an employee’s request to take annual leave during their notice period if there are valid operational reasons for the refusal, such as requiring the employee to engage in a proper handover of duties.

Can notice be given while on annual leave?

Generally, terminating an employee while they’re on leave creates the risk of a general protections claim on the basis that an employer has taken adverse action because of an employee exercising a workplace right (i.e., taking annual leave). Therefore, it is recommended that you engage in a termination process upon the employee’s return from leave. In some situations, this will not be appropriate, and where you think this is the case, it is recommended you seek independent legal advice in order to reduce your risk of a general protections claim.

An employee is able to provide notice of resignation whilst on a period of annual leave, and where this is the case, the employee’s requirement to give notice will overlap with their period of annual leave. That is, the employee has provided notice whilst on annual leave and so the notice is absorbed by the annual leave period.

Termination of employees is tricky, and the notice period of termination or resignation is no different, particularly when factors such as annual leave are also in play. Professional advice should be sought in these situations to mitigate risk and prevent conflict.

For more information on annual leave entitlements and what it means for you, clients should contact the team at HR Assured. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.

Brigitta Poulos is a Workplace Relations Advisor at HR Assured who loves helping clients and businesses achieve excellent workplace compliance with their obligations and duties, and interpretation of relevant employment legislation and awards. She particularly enjoys researching and explaining new or ‘hot’ topics in the workplace relations and human resources fields to our clients.