Annual leave is more than just a legal entitlement - it’s a vital tool for maintaining employee wellbeing, productivity, and organisational resilience. Yet, even in 2025, many employers are still facing high leave accruals as employees hesitate to take time off.
Whether it’s a beach holiday, a family camping trip, or simply a week at home to recharge, taking leave is essential. Despite workers being able to travel without restriction and flexibility being the norm - employees have developed a resistance to using their annual leave and instead many are opting to save it for a rainy day.
Achieving a balance between work and home life is critical to an employee’s mental, emotional and physical wellbeing. It generates an opportunity to connect with family and friends, immerse yourself in a hobby or even a new culture. When employees put off annual leave, there are many ramifications to their ability to be their best self at work and it can also harm the business.
Sometimes employees that work in a small business or an environment where they are ‘the only one with a specific skill’ feel that it is selfish or showing a poor work ethic to take time off. The truth is that the best thing loyal and committed employees can do is to take their leave regularly to be able to perform well, support succession planning and keep annual leave liabilities low. It also helps the business to promote a culture of rest and recovery.
A “leave hoarding” mindset can lead to burnout, disengagement, and rising leave liabilities - none of which are good for business.
When employees avoid taking leave, it affects more than just their mental health. It can lead to:
For employers, the consequences include:
The National Employment Standards (contained within the Fair Work Act 2009) allow modern awards and enterprise agreements to include terms permitting employers to direct employees to take annual leave in certain circumstances. Awards and agreements commonly allow directions to take annual leave where an employer is undertaking an annual shut down or where an employee has accrued ‘excessive’ annual leave (usually defined as greater than 8 weeks’ leave).
The particular terms of awards and agreements can vary, so employers are encouraged to seek advice from Ai Group prior to forcing workers to take leave to ensure that they are compliant with workplace agreements and relevant legislation.
For further assistance see the following resources:
There is no question that employees value the concept of annual leave, but the thought of returning to an overflowing inbox, disgruntled customers and a backlog in production is anything but appealing. If you have ever been in this position, you would be forgiven for dragging your feet in booking another holiday to avoid the ‘punishment of the work pile up’ on your return.
If employers are serious about reducing leave liability and more importantly, creating a culture of balance where workers can operate with a fresh mindset to avoid mistakes or accidents; then it is time to consider if the work environment is conducive to taking leave. Ask yourself:
Knowing your obligations as an employer, as well as communicating employee responsibilities, is essential in ensuring that the various forms of leave available to employees is managed effectively.
Ai Groups recently updated Managing Leave Handbook provides helpful and practical information on how to manage all the different forms of leave in the workplace and explains the interaction of the National Employment Standards with modern awards, enterprise agreements, contracts and any relevant state legislation. The Handbook also offers guidance on the implementation and management of leave policies and procedures, as well as a comprehensive 'frequently asked questions' section
All purchases receive a complimentary subscription to our annual updating service until 30 June 2026! Visit our online shop for more information and to order your copy today!
Not every holiday needs to be a grand adventure. Support employees who want to take time off for simple things - like a staycation or a home project. All reasons for leave are valid.
Leaders must walk the talk. If managers are sending emails at midnight or skipping their own holidays, it sends the wrong message. Promote boundaries and lead by example.
No one wants to return from leave to a mountain of work. Implement a coverage plan that ensures employees can truly switch off - and return without stress.
Ask employees about their leave plans. If they’re hesitant, explore why. It could be workload concerns or uncertainty about coverage. Collaborate on a plan that works for everyone.
Create a “buffer policy” that gives employees time to catch up after leave - no meetings, no deadlines, just space to ease back in. This shows respect for their time off and reduces re-entry stress.
A well-drafted leave policy is essential. It should include:
Ai Group Members can see our Sample Leave Policy for assistance.
Avoiding the leave conversation can lead to overworked employees and ballooning liabilities. Instead, foster a culture where leave is celebrated - not seen as a disruption.
Start with regular, open conversations about workload, wellbeing, and time off. You might uncover the real reasons employees aren’t taking leave - and be in a better position to support them.
Employers are encouraged to revise their approach to leave to ensure that it best meets the needs of the business and the employee group. Care should be taken to ensure that key changes in the access to and taking of leave is conducive to employee wellbeing and compliant with relevant industrial agreements.
Ai Group has experienced HR consultants who can partner with your business to devise workplace strategies designed to increase engagement and operational efficiency. For assistance with your workplace matters, Members of Ai Group can contact us or call our Workplace Advice Line on 1300 55 66 77 for further information.
Related HR Resource Centre content to assist Members of Ai Group with understanding and managing annual leave include:
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Georgina is the Senior HR Content Editor – Publications at the Ai Group. With over 25 years of experience in human resources and leadership, she has demonstrated her expertise across a diverse range of industries, including financial services, tourism, travel, government, agriculture and HR advisory. She is also an accomplished writer and editor, known for creating high-quality, engaging content that educates and informs. Her writing includes a variety of formats, such as blogs, articles, policies, templates and guides.
