Leave Policy

Author: Jasmine Burrows, Progressive Legal

Leave policies play a crucial role in creating a healthy and balanced work environment for employees. In Australia, where work-life balance is highly valued, businesses must adhere to specific legal requirements regarding leave entitlements.

This page will provide a comprehensive guide to leave policies for businesses, including what is a leave policy, why your business needs one, the relevant legal obligations, the types of leave available, and what should be included. 

What is a Leave Policy? 

A leave policy is a set of guidelines and rules established by a business to govern employee absences from work.

It outlines the types of leave available to employees, the eligibility criteria, the process for requesting and approving leave, and any other relevant rules and regulations related to time off. Every leave policy will be different and can depend on the business or its circumstances.  

Why does your Business need a Leave Policy? 

Having a comprehensive leave policy is crucial for businesses for several compelling reasons. Below are some of the key reasons why your business needs a leave policy: 

Legal Compliance

Employment laws and regulations often mandate specific leave entitlements for employees. A well-defined leave policy ensures that your business adheres to these legal requirements, preventing potential legal issues, disputes, and penalties. 

Employee Well-being

A leave policy demonstrates your business’s commitment to supporting the well-being of its employees. Providing paid time off and leave entitlements allows employees to recharge, manage personal matters, and address health-related issues, leading to a happier and more engaged workforce. 

Work-Life Balance

A leave policy promotes work-life balance for employees. By allowing them to take time off for personal reasons, vacations, or family obligations, your business shows that it values the holistic well-being of its workforce, leading to increased job satisfaction and productivity. 

Absence Management

Having a structured leave policy enables your business to manage employee absences more efficiently. It establishes a process for requesting and approving leave, making it easier to plan work coverage during employee absences and minimise disruptions to business operations. 

Fairness and Consistency

A well-communicated leave policy ensures that all employees are aware of their entitlements and the rules for taking leave. This fosters fairness and consistency in leave management, preventing potential favouritism or confusion among employees. 

Employee Retention and Loyalty

A generous and supportive leave policy can contribute to higher employee retention rates. When employees feel valued and cared for by the company, they are more likely to remain loyal and committed to their roles. 

Attracting Talent

An attractive leave policy can also serve as a competitive advantage when recruiting new talent. Prospective employees often consider leave benefits and work-life balance offerings when choosing an employer. 

Legal Protection

A well-documented leave policy can protect your business in case of disputes or claims related to leave entitlements. It serves as a reference point in case disagreements arise regarding employee leave. 

Business Reputation

A business with a strong leave policy and a positive approach to employee well-being is likely to gain a favourable reputation among potential customers, partners, and investors. 

Employee Productivity

By providing adequate time off, employees are more likely to return to work refreshed and focused, leading to increased productivity and better job performance.

What are the Legal Obligations for a Leave Policy? 

Australian businesses must comply with several legislative frameworks when it comes to leave policies. The key legal obligations include: 

Fair Work Act 2009

The Fair Work Act governs leave entitlements, including annual leave, personal/carer’s leave, and parental leave, under the NES. It also outlines the rules and conditions for compassionate leave and community service leave. 

National Employment Standards (NES)

The NES sets out the minimum employment entitlements for all employees covered by the Fair Work Act. It includes provisions related to leave, working hours, and other important aspects of employment. 

Modern Awards

Some industries have modern awards that may contain specific provisions related to leave entitlements. Businesses must ensure they are aware of and compliant with the relevant award that applies to their employees. 

State and Territory Laws

Long service leave entitlements, including the accrual rate and eligibility criteria, can vary between states and territories. Businesses should be familiar with the applicable state or territory laws. 

Individual Employment Agreements

While most employment agreements will state that the above national standards govern leave under that agreement, some employees receive extra leave in their agreements. It is important to check individual employment agreements to make sure that you are fully considering your employee’s entitlements.

What are the Types of Leave? 

In Australia, employees are entitled to different types of leave, designed to support their well-being and personal needs. The primary forms of leave are: 

Annual Leave

Under the NES, full-time and part-time employees are entitled to paid annual leave. The minimum annual leave entitlement is 4 weeks (20 days) per year based on the ordinary hours of work, and this accrues progressively throughout the year of service. 

Personal/Carer’s Leave

Also known as sick leave, personal leave allows employees to take time off when they are ill or injured or need to care for an immediate family or household member who is sick. Full time employees are entitled to 10 days of paid personal/carer’s leave per year, and pro-rata for part-time employees. 

Bereavement and Compassionate Leave

Employees may take compassionate leave to deal with the death or serious illness of a close family member or household member. This leave is usually unpaid but can be taken as needed. 

Parental Leave

Parental leave provides employees with time off when they become parents. This includes maternity leave, paternity leave, and adoption leave, all of which have varying entitlements and conditions. 

Long Service Leave

Long service leave is available to employees who have worked for the same employer for an extended period, usually around 10 years. The entitlements and conditions of long service leave vary by state or territory. 

Other forms of leave

The Fair Work Act allows for additional forms of leave, including: 

• Public Holidays 
• Family and domestic violence leave 
• Community service leave (including jury duty leave). 

What should a Leave Policy include? 

Purpose

Clearly define which types of leave the policy covers and indicate who the policy applies to i.e. full-time and part-time employees.  

Types of Leave

Specify the different types of leave offered by the business, such as annual leave, sick leave, maternity/paternity leave, bereavement leave, personal emergency leave, jury duty leave, etc. Clearly outline the purpose and conditions for each type of leave. 

Eligibility

Define the criteria that employees must meet to be eligible for each type of leave. This may include factors such as length of service and any probationary period requirements. 

Entitlements

Clearly state the amount of leave employees are entitled to for each type of leave. This includes details about the accrual of leave, the maximum accumulation allowed, and any limitations on carry-over of unused leave from one year to another. 

Leave Request Process

Outline the procedure employees must follow to request leave, including the timeframe for submitting requests, any necessary documentation, and the approval process. 

Leave Approval and Denial

Explain the criteria used for approving or denying leave requests, taking into account factors like operational needs, staffing requirements, and fairness in leave distribution. 

Paid and Unpaid Leave

Clearly specify which types of leave are paid and which are unpaid. Include details about how paid leave is calculated (e.g., based on regular salary or average earnings) and any conditions for receiving pay during leave. 

Extended Leave

Address procedures and requirements for extended leaves of absence, such as medical leaves, disability leaves, and parental leaves. 

Cashing Out Leave

If applicable, outline whether employees have the option to cash out their accrued leave and the conditions under which this is allowed. 

Key Takeaways 

Leave policies play a pivotal role in fostering a supportive and compliant work environment. By crafting well-structured and legally compliant leave policies, companies can promote employee well-being, job satisfaction, and productivity. Simultaneously, these policies ensure that businesses adhere to labour laws, mitigating the risk of legal disputes and penalties. Striking a balance between the business’ needs and employees’ rights is key to creating a harmonious workplace that thrives in the long run. 

If you need a leave policy drafted for your business, do not hesitate to contact our experienced workplace team at Progressive Legal. Simply give us a call on 1800 820 083 or make an enquiry below.  

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