How to reduce leave liability without forcing anyone out the door.

If you run payroll for a medium or large Australian business, you'll know the number. It's sitting there on your balance sheet right now — the total dollar value of all the annual leave your staff have accrued but haven't taken. For many businesses, it runs into the hundreds of thousands. For larger ones, it's in the millions.

This liability has been growing steadily for years, driven by the rise of hybrid work, busier workloads, and a workforce that's increasingly reluctant to disconnect. According to recent data, Australian employees have collectively accrued over 209 million days of untaken leave — worth around $39 billion.

So what can you actually do about it?

Why forcing leave often backfires

The instinctive response for many employers is to mandate leave — to tell staff with excessive balances that they must take time off by a certain date. Whether and when that's permitted depends on workplace law and individual circumstances (the Fair Work Ombudsman is the place to check). But even where it's allowed, in practice it tends to create resentment. Employees feel managed rather than trusted, and productivity can actually drop around forced leave periods as people rush to clear their desk before they go.

There's also the operational disruption to consider. If you've got a team of five and two of them are forced to take leave in the same quarter, you're down 40% capacity whether you planned for it or not.

A better option — leave donation

There's an approach that sidesteps the trade-offs of forcing leave entirely: giving employees the option to donate some of their accrued leave to a charity they care about.

This is where Leave2Give comes in. Employees who have significant leave balances but don't want to take time off can choose to donate some of their accrued leave to a registered charity. The leave is deducted from their balance, the liability reduces from your books, and the charity receives the funds directly.

The employee's take-home pay is completely unaffected — the donation comes from the value of already-accrued leave, not from their salary. They simply turn leave they were never going to use into something meaningful.

Why leave donation is particularly effective

Other leave liability reduction strategies involve trade-offs — either operational disruption, cost, or staff dissatisfaction. Leave donation is unusual in that it creates almost no downside:

• No operational disruption — the employee stays at work, fully productive
• No cost to the employer — the leave was already accrued and owed
• Positive impact on culture — employees feel good about where their leave went
• Real ESG outcomes — measurable charitable impact you can report on
• Easy and streamlined — we make it simple to get the funds to charity; you just follow your normal payroll processes

Research consistently shows that workplace giving programs — especially those that feel genuinely voluntary and values-aligned — improve engagement scores and reduce turnover. Leave donation ticks both of those boxes.

The compliance angle

Leave entitlements and employer obligations are governed by workplace law, and the rules around accrued and excessive leave balances can be detailed. We're not in a position to advise on any of that — so rather than set out what the rules are, we'd simply encourage you to go to the source.

The Fair Work Ombudsman is the authority on annual leave and employer obligations in Australia, and it's the right place to check your specific position. For advice tailored to your organisation, speak with an employment lawyer or your HR advisory service.

Getting started with Leave2Give

Getting started with Leave2Give is straightforward. We make the process easy and streamlined to get the funds to the charities your employees choose — while you simply adhere to your normal payroll processes. There's no heavy lifting required from your team.