Annual Leave in Advance

Many employers try to do the right thing by their employees and often provide a benefit to the employee that they are not otherwise entitled to, such as annual leave in advance.

Too often we receive a phone call from a member where an employee has resigned, or whose employment has even been terminated by the employer, and the employee has taken more annual leave than they were otherwise entitled to take based upon their length of employment.

As such, the employee owes the employer money at the time of departure. Some refer to this as negative leave.

Negative leave is a discretionary arrangement that you may offer employees who have exhausted their accrued leave entitlements but need additional time off work.

This isn’t a problem if the employee continues to work, their future leave accruals will counter the excessive leave taken. However, if they resign their employment or their employment is terminated for whatever reason, you have to make an arrangement for the employee to pay back the negative balance. In many cases the employee does not have enough money to do so, and it is costly and time-consuming to pursue the matter through the courts.

Except in exceptional circumstances, we recommend that employers be very careful about providing paid leave when the employee doesn’t have the necessary leave accrued. You can grant them unpaid leave and therefore there is no debt built up that may never be repaid.