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Creating a Leave Policy for Your SME

Creating a fair leave policy is vital for employee satisfaction and overall health of the business. It is naive to think that there is a one-size-fits-all solution when it comes to leave policies for SMEs. The size, nature, and culture of the business will determine how a business structures leave. We put together a few guidelines for SMEs to follow when designing their unique leave policy.


What are your business goals?


Revert back to your business plan, which should have evolved since you first launched your business. The leave policy for a business should support and assist in achieving these business goals. Giving your employees half the year off in paid annual leave is hardly going to be conducive to success. Let’s take a look at two examples:


Example 1.

Type of business: Retail mattress store

Busiest days of the week: Saturdays, Sundays

Non-negotiable days: Employees must work on public holidays

Least busy days of the week: Mondays, Tuesdays


It would be prudent for the leave policy to exclude weekends as an option for employees to take off. Or, alternatively, set a limit on how many weekends full-time staff can take off in one year. Employees should be made aware before they join the best days to take off every week are Mondays and Tuesdays.


Example 2.

Type of business: Offshore IT Services Firm

Leave restrictions: Client commitments and deadlines will determine leave

Solution: Employees cannot take more than two consecutive periods of leave



Describe your culture. Does your leave policy reflect?


While it is important to ensure your leave policies are in alignment with your business goals, it is vital that you consider Employee experience when designing your leave policy. A highly restrictive leave policy can result in diminished morale and employee satisfaction. Have a think about the culture of your small business. Does the culture think about the employee’s life outside of work including family life? It should. Remember, a happy employee makes a happy worker and productive worker.


What leave entitlements are mandatory in Australia?


Every business regardless how big or small must abide by the mandatory leave policies outlined by the Fairwork Ombudsman.


Annual Leave


All employees (except for casual employees) get paid annual leave.

Amount of leave: Full-time and part-time employees get 4 weeks of annual leave, based on their ordinary hours of work.


Paid sick and carer’s leave

Employees get:

  • 10 days each year for full-time employees
  • pro rata of 10 days each year depending on their hours of work for part-time employees.

Example: Scott is a full-time employee who works 38 hours per week. Ben is a part-time employee who works 19 hours per week. Scott gets 10 days paid sick and carer’s leave per year. Ben gets 5 days paid sick and carer’s leave per year as she works half the hours Scott works.