Annual leave is designed to make sure people are adequately rested and capable of performing their job. We outline a few top reasons directors and business owners, along with other employees, should take leave from their business, and why it just might be the best thing you’ve ever done!
Rest
Rest is important for everyone working in the business – even those at the top! Some of the benefits of leave include reduced stress levels, renewed focus and a boost for morale and engagement.
Additionally, taking leave can also decrease unplanned absences as employees have the time to attend to personal issues, as well as increased retention as employees are rested and motivated.
This idea of rest being important is consistently backed up by research. A study by Ernst & Young demonstrated a direct correlation between vacation time and employee performance. Specifically, for each additional 10 hours of vacation taken, employees’ year-end performance ratings improved by 8%.
Fresh eyes and role modelling
For directors in particular, it can be easy to be bogged down in the day-to-day running of a business. Taking a breather can not only help to clear the mind, but down time can allow some time to step out of the business and think about long-term goals and vision. Setting aside some time for goal planning on return to work can be useful to capture all the ideas dreamt up on your break.
It is also encouraging for your staff to see you taking a break, setting an example for using annual leave and the rejuvenating benefits it has.
Reduce liability
Ultimate Tax & Advisory Managing Director Bobby Serval said this was an area often overlooked by businesses.
“If you have a director on salary, they are entitled to annual leave as part of that employment,” he said.
“By allowing leave to accumulate, this can cause problems down the track for those with a company structure. Not just for the lack of proper rest for directors, but that built-up leave still needs to be paid.
“Director leave is a financial liability for the company, as it needs to be paid out at some point, it can’t just be cleared away. For a small business this could be a huge financial hit if they ever choose to sell the company, there is a breakdown of arrangements with business directors or a marriage breakdown.
“We encourage all directors to be mindful of accumulated leave and keep it at manageable levels. This also goes for all employees of the company – there should be policies in place to ensure employees are taking leave throughout the year.”
Taking leave
In Australia, there’s no minimum or maximum amount of annual leave that can be taken at a time. Provided the employer and employee agree, Fairwork states that an employee can take a part day,single day, or number of days or weeks off. Employees don’t need to take all their yearly annual leave at once. This is something to consider in your business and how people can use their leave effectively to maintain their health and happiness, while balancing business needs.
Some of the best ideas for your business might just come from yourself or a staff member when taking leave, plus employees will perform at their best when they return to work refreshed!
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