Award Changes Affect Direction to Take Unpaid Leave During Annual Shutdown Periods

As previously reported in the 28 July 2023 Member Update there have been some significant changes to an employer’s ability to direct employees to take leave during annual shutdown periods, which usually occur during the Christmas and New Year period. 

What are the changes? 

Previously, where an employee did not have enough paid leave to cover the entirety of the shutdown period, the employee could be directed to take unpaid leave. This is no longer the case today. Employers now do not have the right to direct employees to take any period of unpaid leave over the designated shutdown period.  

What are the rules now? 

The Fair Work Commission made determinations across 78 Modern Awards which now standardise the shutdown provisions which will affect many businesses and across all different industries.  

The rules today require:

• Written notice to be given by the employer to employees, of the businesses intention to temporarily shut down. In some Awards this notice must be given no later than 2 months before the intended shut down date. 
• Employees may be directed to take paid annual leave, where an accrued entitlement is available, during the temporary shutdown, so long as the direction is reasonable and is given in writing.  
• Where an employee’s paid leave balance is not sufficient to cover the whole shutdown period, the employee may apply to take annual leave in advance or unpaid leave. This request must be done in writing and agreed to by the employer. Any request for annual leave in advance must be made in accordance with the applicable Award.  
• If an employee does not agree to take annual leave in advance or unpaid leave, the employer may allow the employee to work or pay the employee their entitled wages during the shutdown period. 

 Next steps 

With the festive season approaching if there is an intention to temporarily shut down business operations over the Christmas / New Year period, it would be advisable for employers to – 

• review their notification obligations under the appropriate Award to ensure the correct amount of notice is given to employees 
• plan for discussions with employees in relation to taking unpaid leave or annual leave in advance. This may include training with the managers, supervisors or human resource personnel in how to have such conversation with employees and what is to be discussed 
• review and update any business practices procedures relating to temporary shutdown periods for employees, particularly around what is considered a reasonable request and required notice periods   

Should you require more information on your obligations relating to directions to take leave during shutdown period, the Workplace Relations and Legal Team are here to assist you. Please call the team on (02) 6175 5900.