The business case for monitoring employee annual leave allowance

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Many people go through their careers with a surplus of annual leave allowance. They might avoid taking annual leave because they feel guilty about taking time off or are worried about the workload when they return to work. 

By the end of 2021, 10.5% of paid workers had at least seven weeks of annual leave accrued, an increase from the 9.7% a year earlier. While this trend coincided with the COVID lockdowns around Australia when there was little reason to take leave for travel, it still demonstrates a worrying trend and one that could negatively impact your business.

While annual leave allowance is an entitlement created for the benefit of full-time workers, you must manage your team’s annual leave accrual. Doing so means that you will see the following benefits.

Taking annual leave benefits your staff

Annual leave allowance primarily benefits your staff; it ensures people can take time off work and lead balanced lives. A few of the key benefits for staff include:

Improved work-life balance

Annual leave allows employees to spend more time with their families and friends, engage in hobbies and activities they enjoy or recharge and refresh. This improves their work-life balance, increasing job satisfaction, motivation, and productivity.

Reduced stress and burnout

Prolonged work-related stress can be a significant problem for employees, leading to various physical and mental health issues. By taking annual leave, employees can reduce their stress levels, which helps them to avoid burnout and maintain their physical and mental health. People who take regular breaks from work are often more focused, productive, and motivated when they return.

Increased job satisfaction

Using annual leave allowance can lead to increased job satisfaction. Employees taking time off are more likely to return to work feeling refreshed and energised, leading to greater job satisfaction and loyalty to the company.

When people take leave, your company benefits

You will see some benefits to the business when people use their annual leave allowance:

Reduced financial burden

It is your responsibility as an employer to pay out accumulated annual leave allowance when someone resigns without taking all of their leave. So, when annual leave accumulates, it creates some negative consequences for your company and means that you operate with the threat of a large payout impacting your finances. By encouraging employees to use their annual leave allowance throughout the year, you reduce the amount you may need to pay in a lump sum.

Increased employee engagement and retention

People that take their annual leave allowance are generally more engaged and motivated at work. By taking time away from work, people can reduce their stress levels, avoid burnout, and return to work feeling refreshed.

Improved creativity and innovation

Taking time away from work can also lead to increased creativity. By engaging in activities and experiences outside of work, people can gain new perspectives, ideas, and insights to apply to their work. This can lead to increased creativity and innovation in the workplace, which can ultimately benefit the team in problem-solving and collaboration.

Your team experiences benefits too

Encouraging people to take their leave allowance benefits their colleagues in the following ways:

A good attitude towards work

As I mentioned, people who do not take annual leave could have higher stress levels or experience burnout. The symptoms of these mean that people can become short with others. People that feel they have a better work-life balance can be more pleasant to work with.

Reduced absenteeism

Employees who take regular breaks from work are less likely to call in sick or develop burnout. By encouraging employees to use their annual leave entitlement, the company can help to reduce absenteeism and ensure that staff members are healthy and present at work. Other team members will not have to worry about stepping in to complete extra work on short notice.

Better staff coverage

When employees take their annual leave, it provides an opportunity for other staff members to step in and cover their responsibilities in a managed way. Someone expecting to go on annual leave can hand over tasks or train colleagues in preparation, which ensures knowledge transfer between employees, reducing the likelihood of knowledge silos and ensuring the business can operate even when key people are absent.


Monitoring employee annual leave allowance can benefit staff, the company, and colleagues. From improved work-life balance, planning and productivity, and team morale to reduced workload, cost savings, and improved service levels, it is clear that this benefit is essential to the success of any business. By managing annual leave, you can cultivate a happy, productive, engaged workforce motivated to achieve their best work.

Next steps

I help B2B business leaders define or refine their strategies. I also provide strategic advice and consulting on various facets of strategy; business strategy, corporate strategy, product/service strategy, functional strategy, go-to-market, competitive strategy, pricing strategy, etc. 

If you have noticed a problem in your business of annual leave accrual, let’s connect, let’s talk. I have extensive experience in guiding business leaders on financial strategy and leadership. I can work with you to develop an approach that benefits you and your team. I look forward to hearing from you.

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RK is the CEO & Co-Founder of Resonate.

RK is Resonate’s chief strategist, thought leader, and IT industry veteran. Our clients depend on RK to advise on their business strategy, channel strategy, and sales strategy. 

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