Even if Australians won an extra week of leave, we’d need to make sure they could take it

Do your holidays always feel too short? Or are you a parent struggling to juggle the demands of school holidays with the leave you’re allowed to take?

On Wednesday, the Australian Council of Trade Unions (ACTU) launched a major push to give working Australians the right to an extra week of annual leave.

The peak union body says rising work pressures and long hours of extra unpaid work simply aren’t accounted for in the current minimum entitlement to four weeks – which hasn’t changed in about five decades.

In a statement, ACTU Secretary Sally McManus said Australia’s system was lagging other countries and had fallen out of step with the times:

The majority of European countries have already moved beyond four weeks […] It’s time Australia caught up, our annual leave has been frozen at four weeks since the mid-1970s.

Major business groups, however, quickly voiced their opposition. The Australian Industry Group’s chief executive, Innes Willox, called the proposal “out of touch with reality”, given the nation is in a “productivity crisis that is driving up inflation”.

What are the unions asking for?

The ACTU is calling for full-time employees to have a minimum right to five weeks off, up from the current level of four (pro rata for part-time employees).

For shift worker employees, who currently have a right to five weeks off, they want an increase to six (pro rata for part-time shift workers).

There are some obvious upsides to giving workers an extra week’s leave. These include people having more time to rest and enjoy leisure time – and also to manage other important commitments outside work.

The right to paid annual leave hasn’t been around for as long as you might think in Australia. The printing industry was the first to win the right to a week of paid annual leave in the mid-1930s. In 1941, it became standard across other industries.

Leave entitlements slowly rose over the following decades, reaching four weeks in 1974. But they haven’t changed since.

Why it’s up for debate

It’s not the first time an increase to five weeks has been proposed. But this latest push comes amid a broader examination into whether Australia’s minimum standards for employees are adequate.

Late last year, the federal government launched an inquiry into the National Employment Standards which are part of the Fair Work Act.

Beyond leave entitlements, the inquiry could also examine related provisions such as those defining “reasonable hours”.

Is this the best way to tackle unpaid overtime?

At the centre of the ACTU’s proposal is the need to address unpaid overtime at work.

Here, they have identified a real problem. But it’s important to clarify what we’re talking about. Historical data from the Australian Bureau of Statistics shows average hours worked by full-time employees have fluctuated, but fallen slightly since the 1990s.

Instead, we’re talking about unpaid, extra work, which doesn’t get included in official statistics.

Citing recent research by the Australia Institute’s Centre for Future Work, the ACTU said workers perform an average of 4.5 weeks of unpaid overtime each year.

The ACTU said the proposal would allow them to “get back” at least one of these weeks, as leave.

There are other issues to address

It’s fair to ask why we have this problem in the first place.

Under the National Employment Standards in the Fair Work Act, your employer can ask you to work more hours if it’s “reasonable”. And conversely, employees have a right to refuse to work hours that are unreasonable.

However, this provision doesn’t work very well in practice. For one, it is a very difficult protection to enforce. While it might appear to provide workers with a hard limit, the wide range of exceptions mean, in practice, it tends to be more porous.

There have been very few cases testing its limits in court. Among final rulings we do have, there have been some egregious examples of extreme working expectations.

Problems more leave may not solve

Giving employees the right to an extra week of leave may not address broader cultural issues around overwork.

If the work that is asked of some employees is not reassessed, they may end up simply trying to do the same amount of work across the year – in 47 weeks instead of 48.

Even under the current model of four weeks, many employees struggle to find space in their working lives to access their existing leave entitlements. Employers need to create the space for employees to take leave, without unduly intensifying workloads.

What’s the cost?

Then, there’s the question of cost. Adding an extra week will inevitably create extra costs and administrative burden for businesses.

Writing for The Conversation in 2024, University of Melbourne economist Jeff Borland estimated an extra week of leave would increase labour costs by about 2% – which he pointed out was less than the usual annual growth in full-time weekly earnings.

Whether the union push for more paid annual leave succeeds or not, employers can help themselves and their employees by proactively managing staff access to leave. Employers should also ensure that work expectations are reasonable and achievable within existing work hours.

This will avoid leave accumulating, creating financial liabilities for the employer. And it will help workers, by making sure they’re getting the breaks they’re entitled to.