One employee had accrued nearly 10 weeks of annual leave.
At first, it didn’t seem like a big problem to the business owner.
BUT AS THE EMPLOYEE’S WAGE INCREASED, the potential cost of that leave increased too!
This is one of those numbers that can sit quietly on a balance sheet until suddenly it matters.
An employee resigns.
Someone retires.
Several team members want to take leave at the same time.
Or the business finally realises just how much annual leave has accumulated across the team.
Annual leave is typically considered excessive when an employee has accrued more than 8 weeks of paid annual leave, or 10 weeks for some shiftworkers.
Under many awards, employers may be able to direct an employee with excessive annual leave to take some of it.
See the Fairwork website or search FAIRWORK EXCESS ANNUAL LEAVE as there are rules around doing this, including written notice and notice periods, so it’s important to check.
But here’s why now is the perfect time to look at it.
CHRISTMAS IS COMING.
Many businesses close or slow down over the Christmas and New Year period anyway.
That can make it an ideal opportunity for employees with larger leave balances to take some additional annual leave.
But don’t wait until December to think about it.
Start planning now.
Review your team’s annual leave balances.
Identify any excessive balances.
Have conversations with your employees about their Christmas leave plans.
If you’re considering directing an employee to take excessive annual leave, check the applicable award or enterprise agreement and the required notice periods now.
And importantly, forecast the cash you’ll need to cover it.
Your team taking well-earned leave shouldn’t create a surprise cashflow problem for the business.
If you know what’s coming, you can plan for it.
Christmas is less than three months away.
If you haven’t already planned for the cash your business will need over the Christmas shutdown and annual leave period, now is the time.
For a set and forget cashflow system that works, before Christmas, schedule a call now
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