Can Your Employer Force You to Take Annual Leave? Shutdown & Excessive Leave Rules
Your employer can direct you to take annual leave in limited circumstances: business shutdowns and excessive leave balances. Know the rules, notice periods, and your rights.
Business shutdowns: Christmas and holiday closures
Many Australian businesses close for a period over Christmas and New Year, and modern awards typically allow employers to direct employees to take annual leave during a shutdown period. A shutdown (also called a closedown) is when a business or part of a business temporarily closes. The most common example is the Christmas-New Year shutdown, but it can apply at any time of the year if the business needs to close — for example, a factory closing for maintenance or a school-based business closing during school holidays. For an employer to direct employees to take annual leave during a shutdown, the applicable modern award or enterprise agreement must contain a shutdown clause. Most major awards do include such provisions. The employer must give employees reasonable notice of the shutdown — most awards require at least 28 days written notice, though some specify different periods. During the shutdown period, employees use their accrued annual leave. If an employee does not have enough accrued annual leave to cover the shutdown, the outcome depends on the award — some require the employer to allow the employee to take leave in advance (going into negative leave balance), while others allow the employee to take unpaid leave or agree to work elsewhere during the shutdown.
Excessive leave: when your balance exceeds 8 weeks
Most modern awards allow an employer to direct an employee to take annual leave if the employee has an excessive leave balance. Under the majority of awards, an excessive leave balance is defined as more than 8 weeks of accrued annual leave (or more than 10 weeks for shift workers). When an employee's balance exceeds this threshold, the employer can enter discussions with the employee about reducing the balance. The process typically involves the employer first attempting to reach genuine agreement with the employee about when they will take leave to reduce the balance. If agreement cannot be reached after genuine discussions, the employer may issue a written direction requiring the employee to take a specified period of annual leave. The direction must be reasonable — it cannot require the employee to take leave that would reduce their balance below 6 weeks. The employee must be given at least 8 weeks notice (some awards require 12 weeks). And the direction cannot require the employee to take less than one week of leave at a time. The excessive leave provisions exist to protect employee wellbeing — research consistently shows that long periods without leave harm physical and mental health.
Reasonable direction requirements: what makes a direction valid
For a direction to take annual leave to be valid, it must meet several requirements of reasonableness. The direction must be in writing and clearly state the dates of the leave period. The employer must have first genuinely attempted to reach agreement with the employee about when the leave should be taken. The employer must consider the employee's personal circumstances, including any planned leave, family commitments, and the employee's own preferences about when to take leave. A direction to take leave over a period that coincides with a family event, a child's school holidays, or another important personal commitment may be considered more reasonable than one that does not. The direction must provide sufficient notice — at least 28 days for shutdown directions under most awards, and typically 8-12 weeks for excessive leave directions. The direction cannot result in the employee's leave balance falling below 6 weeks (for excessive leave directions). If an employee believes a direction is unreasonable, they can dispute it through the dispute resolution procedure in their award or agreement, or seek advice from the Fair Work Commission. Factors that may make a direction unreasonable include insufficient notice, failure to consult, ignoring personal circumstances, or requiring leave during a period that disadvantages the employee.
28 days notice: the standard notice period
The standard notice period for directing an employee to take annual leave during a shutdown is 28 days under most modern awards. This means the employer must give written notice at least 28 days before the shutdown begins. The notice should specify the first and last day of the shutdown so employees can plan accordingly. For excessive leave directions, the notice period is typically longer — 8 weeks under many awards, with some requiring up to 12 weeks. The notice must be in writing and should reference the specific award or agreement clause that authorises the direction. If an employer fails to give the required notice, the direction may not be valid and the employee may not be required to comply. However, in practice, employees who have been given less than 28 days notice for a shutdown should still discuss the situation with their employer before simply refusing to comply. Some awards allow for shorter notice periods by agreement — for example, if an employee is happy to take leave during a shutdown announced with only 2 weeks notice, they can agree to the shorter notice period. Always check your specific award or agreement for the exact notice requirements, as they can vary.
What if you do not have enough leave for a shutdown
If your employer directs you to take annual leave during a shutdown but you do not have enough accrued leave to cover the entire period, several options may apply depending on your award or agreement. The most common outcomes are: the employer allows you to take annual leave in advance, meaning you go into a negative leave balance that is repaid as you accrue more leave; the employer and employee agree to unpaid leave for the days not covered by accrued leave; or the employer finds alternative work for the employee during the shutdown period. Some awards specifically address this situation — for example, the Manufacturing Award requires the employer to allow employees without enough leave to take leave in advance or take unpaid leave. If you are a new employee who has not yet accrued enough leave, your employer should discuss the options with you well before the shutdown. They cannot simply dock your pay without agreement. If you take leave in advance and your employment ends before you have re-accrued the leave, the negative balance may be deducted from your final pay — check your award for the specific rules. If you are directed to take unpaid leave because you have insufficient accrued leave, this should be by genuine agreement. Use our Leave Entitlements Calculator to check your current leave balance and plan for upcoming shutdown periods.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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