In Australia, holiday shutdowns from Christmas into the first week or two of the new year are commonplace. However, this year’s process will need to address new obligations that took effect from 1 May 2023 for employees employed under a modern award.
This follows rulings made by the Fair Work Commission (FWC) in August and December 2022 regarding annual leave shutdown provisions.
The changes impact employers and employees covered by 78 modern awards, where the employer intends to shut down all or part of its operation for a particular period and wants affected employees to take paid annual leave during that period.
It has generally been accepted that the employer has to direct employees to take annual leave in this circumstance.
However, the new Award changes require the employer to give the affected employees 28 days’ written notice of the shutdown period. A shorter notice period may be agreed between the employer and the majority of relevant employees.
The written notice must be given to new starters joining after the notice as soon as reasonably practicable after being engaged.
Employers complying with these requirements may direct employees to take paid annual leave during the shutdown. Again, this direction must be in writing and must be reasonable. There is no guidance as to when such a notice is unreasonable. It will be rare that such a requirement would be unreasonable if the proper notice of the shutdown is given.
However, the FWC considered it did not have the power to include an Award provision that allowed employers to direct employees to take unpaid leave during a shutdown period. This presents issues for employers where employees have insufficient leave accruals due to leave already taken or they have insufficient service.
Employers who are concerned with a situation where it cannot direct employees to take unpaid leave have the following options:
- negotiate appropriate provisions in employment contracts or enterprise agreements to give themselves that right
- give employees the option to take unpaid leave (any agreement to do so must be recorded in writing, e.g. by exchange of emails or text message)
- make it clear to employees that annual leave requests will be refused if it results in insufficient leave being available during the regular shut down period
- use RDOs or time off in lieu of overtime to ensure employees are paid during the shut down
- granting employees with insufficient leave accruals paid annual leave in advance (again, these arrangements will need to be in writing and comply with relevant Award provisions).
With the festive season fast approaching, it is crucial for employers to understand their obligations around annual leave and unpaid leave during shutdown periods. Employees should also be informed about their entitlements regarding leave during workplace shutdowns.
Overall, the best course of action is working together and ensuring good lines of communication.
Navigating these changes can be challenging for many employers. Employers are advised to seek legal guidance to review existing employment contracts, leave policies, or procedures.
Reviewing your holiday shutdown process will help your business ensure compliance with the new requirements.
Below is a list of awards that are impacted:
- Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award
- Aircraft Cabin Crew Award
- Airline Operations–Ground Staff Award
- Alpine Resorts Award
- Aluminium Industry Award
- Ambulance and Patient Transport Industry Award
- Animal Care and Veterinary Services Award
- Aquaculture Industry Award
- Asphalt Industry Award
- Banking, Finance and Insurance Award
- Broadcasting and Recorded Entertainment Award
- Building and Construction General On-site Award
- Business Equipment Award
- Car Parking Award
- Cemetery Industry Award
- Cement, Lime and Quarrying Award
- Cleaning Services Award
- Clerks—Private Sector Award
- Coal Export Terminals Award
- Commercial Sales Award
- Concrete Products Award
- Contract Call Centres Award
- Educational Services (Post-Secondary Education) Award
- Electrical Power Industry Award
- Electrical, Electronic and Communications Contracting Award
- Fitness Industry Award
- Food, Beverage and Tobacco Manufacturing Award
- Gardening and Landscaping Services Award
- Gas Industry Award
- General Retail Industry Award
- Graphic Arts, Printing and Publishing Award
- Hair and Beauty Industry Award
- Health Professionals and Support Services Award
- Higher Education Industry—General Staff—Award
- Horse and Greyhound Training Award
- Hospitality Industry (General) Award
- Hydrocarbons Industry (Upstream) Award
- Joinery and Building Trades Award
- Journalists Published Media Award
- Legal Services Award
- Local Government Industry Award
- Manufacturing and Associated Industries and Occupations Award
- Meat Industry Award
- Mining Industry Award
- Mobile Crane Hiring Award
- Miscellaneous Award
- Nursery Award
- Nurses Award
- Oil Refining and Manufacturing Award
- Pest Control Industry Award
- Pharmaceutical Industry Award
- Plumbing and Fire Sprinklers Award
- Poultry Processing Award
- Premixed Concrete Award
- Professional Employees Award
- Racing Clubs Events Award
- Racing Industry Ground Maintenance Award
- Real Estate Industry Award
- Registered and Licensed Clubs Award
- Restaurant Industry Award
- Road Transport (Long Distance Operations) Award
- Road Transport and Distribution Award
- Salt Industry Award
- Seafood Processing Award
- Security Services Industry Award
- Silviculture Award
- Storage Services and Wholesale Award
- Sugar Industry Award
- Supported Employment Services Award
- Surveying Award
- Telecommunications Services Award
- Textile, Clothing, Footwear and Associated Industries Award
- Timber Industry Award
- Vehicle Repair, Services and Retail Award
- Water Industry Award
- Wine Industry Award
- Wool Storage, Sampling and Testing Award.
Charles Power, Workplace Relations & Safety Partner at Holding Redlich
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