Notice period leave refers to the interaction between an employee’s notice of termination and their right to take annual leave during that notice period. In most jurisdictions, employees can take annual leave during their notice period, but employers may also direct employees to take accrued leave during this time. The rules vary by country and depend on whether the leave is being taken voluntarily by the employee or directed by the employer.
Key Takeaways
- In the UK, employers can require employees to take accrued annual leave during the notice period, but the employee can also choose to take leave
- In Australia, employers may direct employees to take leave during the notice period if the direction is reasonable
- In the US, employers may require employees to use accrued PTO during the notice period, depending on the employer’s policy and state law
What Notice Period Leave Means for Employers
The notice period is a transitional phase where both employer and employee are preparing for the end of the employment relationship. Managing leave during this period is a practical and legal consideration. From the employer’s perspective, having an employee take accrued leave during the notice period reduces the cash payout required on termination and ensures the employee is available for handover duties during the working days.
From the employee’s perspective, taking leave during the notice period may shorten the effective working period, reducing the time available for knowledge transfer and handover. In some cases, employees prefer to work through the notice period and receive the leave payout as a lump sum on termination.
In the UK, the Working Time Regulations 1998 allow employers to require employees to take statutory annual leave during the notice period, provided proper notice is given. However, if the employee has accrued more leave than the notice period allows, the excess must be paid out. In Australia, the Fair Work Commission has confirmed that employers can direct employees to take leave during the notice period if the direction is reasonable and consistent with the applicable Modern Award.
In the US, the FLSA does not specifically address leave during the notice period. Employers generally follow their own PTO policies, and state laws may require payout of accrued vacation on termination.
Notice Period Leave Rules by Region
| Country | Rule | Detail |
|---|---|---|
| UK | Working Time Regulations 1998 | Employers can require leave to be taken during notice period; excess leave must be paid out |
| AU | Fair Work Act 2009 (Cth) | Employers may direct leave during notice period if reasonable; check the applicable Modern Award |
| US | FLSA and state laws | No federal requirement; employer policy and state law govern whether PTO can be mandated during notice period |
How Notice Period Leave Works in Practice
A UK logistics company has a warehouse supervisor, Tom, who resigns with four weeks’ notice. Tom has 18 days of accrued annual leave. The company’s policy is to require employees to take their accrued leave during the notice period where possible. Tom is directed to take 15 days of leave during the four-week notice period, with the remaining three days paid out on termination.
Tom’s last working day is therefore two weeks before his formal termination date. During his final two working weeks, he completes a handover document and trains his replacement. The remaining three days of accrued leave are paid at his normal rate in his final pay packet.
Without this approach, Tom would have worked the full four weeks and received a lump-sum payout of 18 days’ pay, creating a larger financial impact and leaving no handover period.
Common Mistakes with Notice Period Leave
- Failing to pay out accrued annual leave on termination, which is a breach of the NES in Australia and the Employment Rights Act in the UK
- Directing employees to take leave during notice without checking whether the applicable Modern Award permits the direction
- Not including notice period leave provisions in the employment contract or leave policy, leading to disputes
- Assuming the employee cannot take leave during notice, when in most jurisdictions they can choose to do so
- Not accounting for public holidays that fall during the notice period when calculating the effective working period
FAQ
Can I take annual leave during my notice period?
Yes. In most jurisdictions, you can take annual leave during your notice period. Your employer may also direct you to take accrued leave during this time, depending on the applicable law and your employment contract.
Does my employer have to pay out unused leave?
In Australia, the NES requires employers to pay out accrued annual leave on termination. In the UK, the Employment Rights Act requires the same. In the US, it depends on your state law and employer policy.
Can my employer make me take leave during notice?
In the UK, employers can require leave to be taken during the notice period under the Working Time Regulations. In Australia, employers can direct leave during notice if the direction is reasonable. In the US, it depends on the employer’s PTO policy.
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