Many businesses will be preparing for a shutdown period over the upcoming holiday season break. Earlier this year, standardised shutdown provisions were inserted into the majority of modern awards. These covered how you could direct employees to take annual leave or unpaid leave during an annual shutdown. View the list of affected awards containing the new provision on the Fair Work Ombudsman website.

Here’s what you need to know about the new rules regarding employment arrangements during the holiday season break

1. Employers must give at least 28 days written notice of the temporary closure for a particular period. If an employee is hired after notice is given, the employer must give them notice as soon as reasonably possible.
2. An employee may be directed in writing to use their accrued annual leave during the shutdown period, provided that direction is reasonable.
3. If an employee hasn’t accrued sufficient annual leave to cover the shutdown period, the employer and an individual employee may agree for the employee to take leave without pay during the part of the shutdown period there is insufficient annual leave for. This agreement must be in writing. Importantly, it is no longer possible to direct employees to take leave without pay during the shutdown period.

A clause in an employment contract which provides for unpaid leave during a period of annual shutdown may satisfy the requirement for an employee’s agreement in writing. However, this point has not yet been considered by the Fair Work Commission.

Employees without sufficient leave to cover the shutdown

If an employee doesn’t have enough paid annual leave to cover all of the shutdown, the employee and employer can agree in writing to other options for the days not covered such as using:

• annual leave in advance in accordance with the relevant provision in the applicable modern award
• leave without pay
• other paid time such as time off in lieu

If there is no agreement, an employer’s options are limited to:

1. allowing the employee to perform work (if there is any) during the shutdown period, or,
2. paying the employee for the time for which annual leave cannot be used.

Other points to note

1. The shutdown notice period can be reduced if a majority of affected employees and the employer agree.
2. Employees are paid for public holidays during the shutdown period which fall on days they ordinarily work.
3. The direction to take accrued annual leave has to be reasonable. Directing an employee to take all their accrued annual leave for a lengthy shutdown period may not be reasonable.
4. The most straightforward way to obtain employees’ written agreement to take unpaid leave during a shutdown period is including a clause in their employment contract.

For more information on your obligations regarding employment arrangements this holiday season, contact Coleman Greig’s Employment Law team.