If you are a full-time employee, the National Employment Standard (NES) under the Fair Work Act of 2009, entitles you to four weeks of paid annual leave each year.
But because every holiday seems too short and sometimes four weeks just isn’t enough, some employers offer employees the option of buying additional annual leave.
To purchase additional annual leave, the employee agrees with their employer to forgo part of their salary in exchange for more annual leave. If you were to buy an additional four weeks of annual leave a year, your annual salary would be reduced by the equivalent of four weeks pay. The overall reduction in your annual salary is factored into every pay packet.
You earn $1,000 a week. This includes the standard four weeks of paid annual leave ($1,000 x 52 weeks = $52,000 per year)
If you buy another four weeks of leave, you do so in lieu of earning $4,000 (4 weeks x $1,000 = $4,000)
As a result, your annual salary then reduces to $48,000 a year ($52,000 - $4,000 = $48,000 per year)
This annual amount is paid to you across the whole year, reducing your weekly equivalent salary to $923 a week ($48,000 divided by 52 weeks = $923 a week)
Does this apply to me?
The provision for an employee to negotiate additional leave is covered in the Fair Work Act, and this applies to all Australian companies. It is not mandatory; it is at the discretion of the employer to make this available to an employee.
Organisations that are striving to provide their employees with a better work/life balance often allow staff to buy additional leave. Many of the larger employers in Australia, such as banks, telecommunications companies and universities, provide the option for buying additional annual leave.
Even in these instances, the provision may come with conditions, such as:
It may not be available in consecutive years
It may only be available for set number of years. For example, it may be available for five years in a row only
You may have to purchase a set amount of leave, for example, four weeks. You may not be able to purchase any more, or any less
Reasons why a company may offer it
Some small and medium sized businesses may find offering additional leave difficult. If you are in a small team, covering for one person for up to four weeks a year can be hard enough, let alone for eight weeks.
So, while it ‘saves’ a company from the cost of your full salary, back filling your role for the duration of the leave may provide difficult. It may even be more expensive for the company if it has to hire contractors, at a higher rate than your salary, to fill your role while you are on leave.
When negotiating for additional leave, it can be important to outline why you need the leave (e.g. caring for children, elderly or, disabled family members), and for how long you would like to have the leave.
Is it just for one year, or do you need it for many years? Do you plan on taking all the leave in one block (e.g. an eight week overseas trip) or, do you plan to spread it across the entire year (e.g. to care for school aged children during school holiday periods).
While you can make a compelling case, ultimately, it’s up to your employer whether they allow you to purchase additional leave.
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