Refusing annual leave is sometimes necessary, but it can also raise difficult questions about fairness and compliance. Here are five factors that could impact whether a refusal is considered reasonable.

December is often marked by a flurry of last-minute annual leave requests. While some will be straightforward, others have the potential to create tension, especially if operational needs are at odds with employee expectations.

One of the challenges for employers in dealing with these requests is that the laws governing annual leave are highly contextual.

“There’s no prescribed criteria for what constitutes a reasonable refusal of an annual leave request,” says Lauren Brouwer-French, Senior Associate, Harmers Workplace Lawyers. 

“[The Fair Work Act] says that paid annual leave can be taken by agreement between an employee and an employer, and that a request by an employee cannot be refused unreasonably.”

This means a refusal that’s justified in one context might be unreasonable in another, she explains, and a broad range of factors could shift the outcome.

“An employer needs to weigh up factors like the amount of time the employee wants to take off work, whether they have given a reasonable amount of notice, what the operational requirements of the business are during the leave period, and whether granting the leave request will have a detrimental impact on the business.”

Below, Brouwer-French shares advice to navigate some of the most frequent scenarios where annual leave requests become difficult to manage.

1. What if the leave request would disrupt the business?

While operational requirements can be a valid reason to refuse an annual leave request, employers will need to demonstrate that the refusal is grounded in real constraints and not just convenience, says Brouwer-French.

“The Commission has said in a previous decision that there should be unequivocal, documented communication about their decision, either to approve or deny an application, and that any decision should be determined promptly to avoid employees assuming that a leave request is granted,” she says.

“In most cases, it would be sufficient to [lay out] the business’s operational needs and explain to the employee why granting the request would cause an impediment to the business.”

In organisations where operational needs peak at certain times of the year, employers can help prevent conflict by setting expectations early.

“If Christmas is always a busy period, for example, it’s generally reasonable for employers to have some kind of blockout period when leave requests are going to be refused,” she says. 

“But employers still need to consider their genuine operational needs [in each case]. Because if the request is for half a day of annual leave, then it might not be reasonable to refuse even if it’s a busy period.”

“Any decision should be determined promptly to avoid employees assuming that a leave request is granted.” – Lauren Brouwer-French, Senior Associate, Harmers Workplace Lawyers

2. What if an employee has run out of annual leave?

If an employee has used up their annual leave, a refusal will almost always be reasonable, says Brouwer-French.

“Granting leave in those kinds of situations is at the employer’s discretion – there’s no automatic right for employees to take unpaid leave,” she says. “[However], it’s still best practice to give the leave request genuine consideration.”

This should include communicating with the employee to understand the reason for the request, as it’s possible they might be entitled to another form of leave.

“If we’re talking about a family emergency, for example, then it might be a situation where personal leave is applicable,” she says.

Employers can also consider granting annual leave in advance.

“That comes with risks, because if the employer pays annual leave in advance and then the employee resigns, there might be some difficulty recovering the overpayment,” says Brouwer-French. “But it’s still an option.”

Read HRM’s article on managing requests for unpaid leave.

3. What if multiple requests come through at the same time?

When multiple employees want to take leave at the same time, it can quickly become a sensitive issue, particularly in smaller teams where cover is limited.

If the organisation has considered operational requirements and confirmed that it genuinely can’t accommodate multiple leave requests, there are a number of factors they can look at to determine which request to grant, says Brouwer-French.

“There may be a degree of weighing up who made the request first, and how much notice has been provided,” she says.

“It could also be good for employers to have a discussion with the employees [involved] to see if there’s any flexibility on their part.”

For instance, an employee taking a day off for a casual personal commitment may be willing to move it, allowing the organisation to support a colleague with a less flexible need.

If a compromise can’t be reached, the employer should make a clear, well-reasoned decision and communicate it promptly, says Brouwer-French. Even if one employee has to miss out on taking leave, clarity about the reasoning can go a long way towards avoiding conflict and maintaining trust.

4. What if an employee has accrued a long period of leave and wants to take it all at once?

When an employee requests four or more weeks of annual leave, the prospect of covering their workload in their absence can seem daunting. However, Brouwer-French says the length of the break is not, on its own, a legitimate reason to refuse.

“The amount of time that somebody is requesting off cannot be considered in isolation,” she says. “Provided that taking that period of leave isn’t going to cause serious operational issues, and the employee has provided sufficient notice, then it would be unreasonable to refuse the request.”

However, excessive leave accruals can impact businesses in more ways than one – beyond the operational impact, untaken leave can become a serious financial liability. As a result, employers should consider putting measures in place to prevent employees from amassing long periods of leave.

“It’s fine to encourage employees to make sure they’re taking their annual leave regularly to avoid those excessive accruals,” says Brouwer-French. 

“And employers do have rights in relation to directing employees to take annual leave if there is an excessive amount of leave accrued – [which is] usually in the range of eight to 10 weeks, although that can change depending on any applicable awards or enterprise agreements.”

It may also be helpful for employers to have a specific policy that outlines how excessive leave will be managed, she adds.

See HRM’s article on what to do when employees’ annual leave accruals go into excess.

5. What if employees don’t have enough leave for a mandated company-wide shutdown period? 

End-of-year shutdown periods sometimes cause tension around annual leave, whether it’s because an employee doesn’t want to use their leave or doesn’t have enough leave to cover the closure.

“It’s generally acceptable for employers to ask employees to take some form of leave during the shutdown,” says Brouwer-French. “If an employee doesn’t have enough leave accrued, there is scope to come to an agreement for some kind of unpaid leave.

“[However], keep in mind permanent employees on unpaid leave during shutdowns will still be entitled to payment for public holidays during that period.”

To avoid confusion, it’s best to notify employees of shutdown dates as early as possible and remind them to plan their leave with the closure in mind.

As in all the scenarios above, a fair and transparent process matters just as much as the decision itself. Outlining the decision and the reasons behind it clarifies expectations and protects employers from challenges down the line.

Looking for a training program to sharpen your employment law knowledge? Check out AHRI’s Advanced HR Law short course.