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
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
Storage Services and Wholesale Award
Sugar Industry Award
Supported Employment Services 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