Utilising annual leave during the Alert Level 4 lockdown – a good or bad idea?

Case Study

My business is not listed as an “essential service” and has to remain closed during the lockdown. My staff cannot work remotely so there is no business activity being conducted at all. I have requested that staff use-up their outstanding annual leave during this time and once it has been used in full, I expect my staff to take unpaid leave. Can I do this?

I have thought about applying for the Wage Subsidy scheme from the Government but I’m not sure whether my business meets the criteria – is it likely to have a revenue downfall of 30%? I’m not sure, I think so because right now my revenue stream is low. But, I don’t want to lose my staff. What should I do?

Apply for the Wage Subsidy scheme as soon as possible and remove staff from annual leave. But, if I apply for the Wage Subsidy, do I have to top-up staff wages to 80%? This would place further financial strain on my business.


The Government has made it very clear that employers are encouraged to access the Wage Subsidy scheme rather than force staff to take annual leave. An employer can allow staff to take annual leave if this is discussed and openly negotiated in good faith between the parties, but you cannot compel staff to use annual leave at this time. Access the Wage Subsidy instead.

It is not compulsory for you to top-up an employees’ weekly wages to 80%, all an employer needs to do is use their “best endeavours”. In other words, at least try to top-up, if at all possible. If a business will come under further hardship or strain by providing a top-up, then just pass on the Wage Subsidy to staff. It is much more important to save the business and avoid job losses – so, think of the long-term.

The weekly Wage Subsidy of $585.80 (based on a person working 20 + hours per week) is less tax (and all usual deductions). If employees request to voluntarily top-up their wages to 80% by using annual leave, then consider this on a case by case basis. Arguably, if you have sufficient funds to allow staff to utilise annual leave, then you have sufficient funds to offer a top-up to 80%. Therefore, tried to avoid these requests by staff if possible (unless a person is under significant strain).