What is Annual Leave?

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  • Written By: Lainie Petersen
  • Edited By: Melissa Wiley
  • Last Modified Date: 03 October 2019
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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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Post 4

@Laotionne - Some businesses will allow you to cash in vacation days for pay and this way you get the money and get to work and make more money at the same time. This doesn't cost the company any more money since it has to pay you for the days anyway. I guess some businesses handle annual leave days in this way as well.

Post 3

@Laotionne - Some companies will allow annual leave, sick leave and vacation days to add up to a certain point and then you have to use them. I worked at a place where we would get a memo telling us we needed to use our vacation and sick days or else we were going to lose them. This was really convenient because the last thing you want to do is not take advantage of free days.

You can understand why a company would not want you to get too many of these days built up and then take off a month or two with pay. This could put the company in a tough situation.

Post 2

@Laotionne - I think whether or not your annual leave days expire after a certain amount of time depends on the rules of the company where you work. I can remember my mother having a stockpile of annual leaves days that she carried over from one year to the next.

My father would always ask her why she didn't just take some time off and enjoy herself, but she liked having the days available just in case she needed them for some reason. Besides, she also got sick days and vacation days, so she was still able to take time off when she needed to and not use the annual leave days.

Post 1

When your employer offers paid annual leave do you have to use the time within a year. For example, what happens if you haven't used your annual leave days and the year comes to an end. Do you lose that time?

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