What Is Annual Leave?

Some companies have a policy that gives employees regular leaves every year.
An employer may also offer unpaid leave to employees who are experiencing personal issues that require extended time away from work.
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  • Written By: Lainie Petersen
  • Edited By: Melissa Wiley
  • Last Modified Date: 25 November 2014
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Annual leave, sometimes called paid time off or vacation time, is a job benefit that pays workers for days on which they don't actually perform any work duties. Employers typically offer annual leave as a job benefit, though they may be required to do so by employment laws in the countries in which they operate. This benefit generally differs from other types of leave in that employees do not have to have a specific reason for taking the leave, such as sickness, family issues, or disability, but are instead entitled to use their days off to do whatever they wish.

Vacation leave differs considerably from other forms of paid and unpaid leave. For example, many companies offer leave for illness, sometimes called sick leave or paid time off on specific holidays. An employer may also offer unpaid leave to employees who are experiencing personal issues that require extended time away from work. In all of these cases, however, there are qualifications that must be met before an employee can receive the time off. An employee may be required by company policy to provide proof of an illness before being paid for sick days or being allowed to take extended time off to care for a family member. Holiday time off is typically restricted to holidays determined by the employer.


In many countries, annual leave is mandated by law, with each worker entitled to a certain amount of unconditional leave. In other places, including the United States, labor laws do not require employers to offer workers vacation time, though many employers provide this time off anyway. Employers do this to remain competitive with other employers for skilled, quality employees. Many labor specialists also recognize the importance of annual leave for workforce morale, noting that many employees perform their jobs better when they are able to take breaks from work.

The amount of annual leave depends on both employment law as well as the employee/employer contract. Some employers simply provide the minimum annual leave required by law, while others provide additional paid time off as a reward for long service or as a perk for high-priority employees. In many cases, employers offer new employees a limited amount of annual leave but increase it after a certain length of employment. A particularly desirable candidate for employment may be able to negotiate more annual leave than what a new employee would normally be entitled to as part of his compensation package.


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