Yahoo Finance 
‘Tis The Season…
With Christmas just around the corner, now is a timely reminder on how important holidays are. The emergency teams and retail sector don’t have the same luxury that many businesses have at this time of year for an extended break (especially those businesses that have a forced shut-down period), but my advice is still relevant for when people in these occupations can take time off.
For many employees, the Holidays Act affords a minimum amount of annual leave per year. And while many employment agreements require employer consent to leave requests, I suggest that both employees ask for and employers allow employees, where possible, to take at least a two week period of continuous leave.
There are multiple reasons for taking this approach. Where a business continues to operate whilst an employee is on leave, it gives a chance for others to take over the role or at least parts of the role of the employee on leave. This not only gives variation to other employees' roles, but can also lead to questions like 'Why do we do this like this?' or even 'Is this even necessary?'. Often a change in the person performing duties can be beneficial for a business in assessing its processes and systems. It can also be a good opportunity to check upon the efficiency of an employee against another as well as the possibility of detecting any employee fraud or dishonesty.
In my opinion, a two week period is needed to have a proper break from work. One week is too short and it is possible that the leave taker will not properly disengage from work and therefore will not be truly refreshed upon her return. A refreshed worker will give a business more productivity and attention with a lower error rate.
Both casual employees and employers should take the same approach and strive for at least a two week continuous break. By taking leave around Statutory days it can be possible to take at least two weeks off without losing two weeks of normal workdays.
The biggest issue for the self employed is remembering to allow and save for these holidays. Effectively these people should treat themselves as employees and account for this so an effective holiday system is operated. Obviously self discipline is needed but as many of these people are also employers this shouldn't be too hard.
In my career this is the one area I have seen that people in business have not managed well. Many start business with enthusiasm but after about three years with little time off this normally takes its toll. It has been said that cashflow and profitability often cause the demise of many SMEs, but I suggest that low morale due to insufficient breaks causes many business owners to sell, change businesses, or even give up!
Both employers and employees need to manage leave balances. Not only is there the cashflow issue of paying out leave but also the delayed cashflow from not having productivity from business activity. If an employer allows leave to accumulate excessively then this could cause issues later. As mentioned above, excessive accrued leave probably also means that error rates may be high with low morale. Allowing leave to be taken in small lots will not achieve refreshment in my opinion and could actually cause more business interruption rather than if taken and managed in larger lots. Leave should be treated like a savings bank account with a goal of spending it in one major lump at Christmas and the rest at another time like a birthday.
One of the biggest differences between employees and the self employed are holidays. For some reason each other thinks the other is better off. Employees often say that the self employed can take holidays when they like and as often as they like. The self employed often say that they can't afford to take time off and that employees are lucky because the law forces the employers to save to pay for the employee holidays. The truth is that if properly managed, everybody should take the same amount of leave and remain energised and productive.
Please have a relaxing break in the next few weeks. Make your New Year's resolution to actively manage leave, and make it a good habit to maintain rather than letting the process run haphazardly. Everybody deserves time off, and this should ultimately benefit both employees and business owners.
Murray Cooper BMS CA is a director of Accountants on Elliott LP which is a Chartered Accounting firm located in Papakura. Murray has 20 years of accounting experience in commercial and public practice roles. He deals on a daily basis with small to medium business owners with wide ranging accounting issues for entities including manufacturing, retail, trades, rental properties and family trusts.
Disclaimer:
Any views and opinions the writer has expressed are his own and not necessarily those of Accountants on Elliott LP. The information supplied has been written in general terms only. This information should not be relied upon specifically without also obtaining appropriate professional advice after detailed examination of your particular situation.
