Put a stop to your employees' leave accumulation plans today, or you'll suffer financially in the long run...
Employees of the National Australia Bank (NAB) were saving up their annual leave days as Australian law allows them to save up their annual leave if they don't use up their 20 days in any given year. But this becomes expensive for employers, fast, as employees who are made redundant or leave the company are entitled to cash out their leave days. That's why a new strategy's just been introduced to get the employees to take their annual leave days instead of accumulating leave... Here's what the local law says about accumulating annual leave if you have a similar problem in your company.
One of the National Australia Bank or NAB employees had over 100 days' worth of annual leave saved up, says ZDNet.
That's why NAB's human resources analytics team decided to investigate – and they found the less annual leave a worker used up, the more sick leave
he or she was taking.
To tackle this, NAB spread the message that the business would do better in the long run if employees took the annual leave due to them as this would result in a more rested workforce.
But it also took the more drastic step of threatening to cut the bonuses of senior managers if they don't comply by taking their extra annual leave days instead of accruing them.
Not sure where to start?
If you have a similar problem of accumulated leave costing your company, you first need to have a clear picture of how much annual leave your employees are entitled to by looking at how much leave you grant employee in a 12-month annual leave cycle, says the Labour Law for Managers Loose Leaf Service
Make sure your employees understand their leave cycle…
This annual leave period starts when the employees begin employment or complete their prior leave cycle, says FSPBusiness
Then, remember that you can't grant leave more than six months after the end of your employee's leave cycle.
Make these points clear to your employees by updating them on your annual leave policy.
Here's when you'll need to pay your employee out for his accumulated leave…
But remember that you may still need to pay your employee out for his accumulated leave if he's resigned, as you can't allow your employee to take annual leave during any period of notice or termination of employment, says FSPBusiness
Luckily, you can limit the amount of leave you'll be obliged to pay your employees if you make sure they take the annual leave that's allocated to them in their leave cycle.
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