Is the Management Allowed to Withdraw Approval for Annual Leave?

Annual leave is a statutory entitlement under Malaysian labour law. Under Section 60E of the Employment Act 1955, every employee covered by the Act is entitled to a minimum number of paid annual leave days, depending on years of service. Annual leave is earned and belongs to the employee.

However, the law also makes it clear that the timing of leave must be mutually agreed between employer and employee. Except where the contract of service specifically provides otherwise, the employer cannot unilaterally dictate when annual leave must be taken. At the same time, common law principles apply: an employee may not absent himself from work without the employer’s prior approval. In practice, this means the employee must apply for annual leave, and he cannot commence the leave unless and until approval is granted. Therefore, the final say over scheduling rests with the employer.

Can an Employer Withdraw Approved Leave?

Yes. Even after granting leave, management may withdraw or cancel approval if there are valid business reasons. If the employee has not yet started leave, the employer may revoke approval and require attendance. If the employee has already commenced leave, the employer may instruct the employee to return to work.

This prerogative, however, is not unlimited. Employers must exercise it reasonably and in good faith. Cancellation should be based on legitimate operational needs—such as urgent client demands, critical business disruptions, or unexpected staff shortages. It must not be used to victimise or unfairly single out employees, as this could expose the employer to claims of unfair labour practice.

Be Fair – Compensate For Loss

If leave approval is withdrawn and the employee suffers financial loss, the employer should act fairly and consider compensation. For example, where an employee has incurred costs for non-refundable travel tickets, hotel bookings, or penalties to return to work earlier, reimbursement would be the equitable course of action. Although the Employment Act 1955 does not expressly mandate such compensation, good HR practice requires employers to protect employee morale and avoid disputes.

Employees are also strongly advised not to make travel arrangements until written leave approval has been received. This reduces the risk of personal losses if leave is cancelled due to urgent work requirements.

HR Best Practice - Balancing Work and Consideration

The law recognises that annual leave is a right, but it also respects the employer’s prerogative to determine when leave can be taken. Business exigencies may sometimes override personal leisure, but employers must balance this with fairness and empathy.

By compensating genuine losses and exercising discretion responsibly, management can maintain employee trust. At the same time, employees should understand that operational demands of the business may require flexibility.

In conclusion, annual leave belongs to the employee under Section 60E of the Employment Act 1955, but its scheduling is always subject to the employer’s approval. Withdrawal of leave is legally permissible, but it must be backed by solid reasons and handled with consideration to preserve harmony in the workplace.

Chan Wang Tak

Pakar Industry Negara, HR Consultant

Author of 400 Q&A on the Practice of Labour Laws in Malaysia