Is your business planning to shut down over Christmas? Now is the time to check your obligations around notifying employees and directing annual leave.
A shutdown occurs when a business temporarily closes, such as during the Christmas and New Year period.
Many Modern Awards and Enterprise Agreements (EAs) contain provisions governing annual leave during shutdowns. However, the requirements can differ depending on the applicable Award or EA.
Employers should check the relevant provisions before notifying employees of a shutdown or directing them to take annual leave.
Shutdown Requirements for Award-Covered Employees
The majority of Modern Awards provide that:
- Employers may require employees to take paid annual leave during a temporary shutdown.
- Employers must provide at least 28 days’ written notice of the shutdown period to affected employees.
- A direction to take annual leave must be reasonable.
- The notice period may be reduced by agreement between the employer and the majority of affected employees.
- Where an employee does not have sufficient accrued annual leave to cover the entire shutdown, the employer and employee may agree on other arrangements for the remaining period, such as:
- Using accrued time off;
- Taking annual leave in advance; or
- Taking unpaid leave.
Some Awards may also restrict when a business can implement a shutdown, such as limiting shutdowns to the end-of-year period.
It is therefore important to check the specific provisions that apply to your employees.
Some Awards Require Longer Notice Periods
While 28 days’ notice is common, some Modern Awards require a longer notification period.
For example, the Building and Construction General On-Site Award 2020 requires two months’ written notice.
Where employees are covered by multiple Awards, employers may need to comply with different notification periods.
A single shutdown date does not necessarily mean the same notice deadline applies to every employee.
Shutdown Requirements for Enterprise Agreement-Covered Employees
Where an Enterprise Agreement applies, employers should review its terms before announcing a shutdown.
EAs may contain specific provisions addressing:
- When employees can be directed to take leave during a shutdown;
- The notice period required; and
- Any other conditions or restrictions applying to shutdown arrangements.
Employers should ensure that their proposed shutdown complies with the applicable agreement.
What if the Award or Agreement Has No Shutdown Provision?
Employers generally cannot direct employees to take annual leave during a shutdown if the applicable Award or EA does not contain provisions permitting such a direction.
However, employers and employees may agree to alternative arrangements, including taking accrued annual leave, annual leave in advance or unpaid leave.
Early communication is particularly important where agreement is required.
What About Award and Agreement-Free Employees?
Where an employee is not covered by a Modern Award or Enterprise Agreement, an employer may direct the employee to take annual leave during a shutdown, provided the direction is reasonable.
Employers should consider the employee’s circumstances and the reasonableness of the direction before proceeding.
Preparing for Your Christmas Shutdown
With Christmas approaching, employers should review their proposed shutdown arrangements and communicate with employees as early as possible.
Some practical steps include:
1. Check Applicable Awards and Enterprise Agreements
Identify the shutdown provisions, notification periods and any restrictions applying to each group of employees.
2. Provide Written Notice Within the Required Timeframe
Ensure affected employees receive the required written notice in accordance with the applicable Award or EA.
3. Review Annual Leave Balances
Identify employees who may not have sufficient accrued annual leave to cover the shutdown and discuss available arrangements.
4. Consider Employees Who Cannot Be Directed to Take Leave
Plan how employees will be accommodated where the applicable industrial instrument does not permit a shutdown leave direction or where agreement cannot be reached.
5. Review Excessive Leave Balances
Where appropriate, consider whether excessive annual leave balances can be managed in accordance with the relevant Award or EA provisions.
How IRiQ Law Can Help
Planning a Christmas shutdown requires careful consideration of employee entitlements, notification requirements and applicable workplace instruments.
IRiQ Law can assist employers with interpreting Modern Award and Enterprise Agreement shutdown provisions, reviewing leave arrangements and ensuring employees receive appropriate notice.
Contact our team today to ensure your Christmas shutdown is handled smoothly and in compliance with the law.
Get In Touch
Our team provides employment law, industrial relations and safety expertise when you need it most.
Latest News
Posted in News