From 1 May 2023, there are changes to the special provisions in Awards relating to employers requiring their employees to take annual leave during a shutdown period, usually over the Christmas/New Year period.
Some employers may also use these provisions for shutdowns at other times of the year, although a Christmas/New Year shutdown is the most common shutdown period.
The Fair Work Commission, as part of the award modernisation process, has made changes to these provisions and these changes no longer allow an employer to require employees to take annual leave (or unpaid leave if they don’t have enough annual leave) during the shutdown period.
The changed provisions are:
- Employers are now required to request, in writing, that employees take annual leave, and the request must be reasonable. They can’t direct an employee to take annual leave.
- Employers can no longer direct employees to take leave without pay if they haven’t accrued enough annual leave to cover the shutdown period. If an employee needs to take unpaid leave it needs to be by agreement.
- Employers need to notify employees in writing at least 28 days before the shutdown (some Awards will have a longer notice period).
- An employer may agree to an employee taking annual leave in advance in accordance with the provisions in the award.
These changes will apply to most modern awards. It’s likely that existing conditions in an enterprise agreement will continue to be effective while the agreement remains in place. But it’s also likely that the shutdown provisions will need to be changed if the agreement is renewed.
As an employer, you’ll have 3 options in relation to employees that haven’t accrued enough annual leave:
- allow them to continue to work over the shutdown period, or
- pay them during the shutdown period, or
- allow them to take annual leave in advance.
Employers will need to manage annual leave during the year, and also manage how newer employees will accrue annual leave for a shutdown. Employers will need to consider if they are happy to allow an employee to take annual leave in advance which would result in a negative annual leave balance.
Some things to consider:
- Check the award that applies to your employees to confirm what changes you need to make;
- Check and amend any policies you have, if needed, to reflect the award changes;
- Implement a process to control and manage the taking of annual leave to ensure that sufficient paid leave remains to cover a shutdown period.
These changes are effective 1 May 2023, so you have time to make sure you are managing annual leave balances to cover a Christmas/New Year shutdown period.
It will be important to be aware of employees’ annual leave balances throughout the year and make sure that you have written agreements in place if an employee elects to take unpaid leave.
You may need to consider if you can provide work to an employee during a shutdown period if they don’t want to take their annual leave.
From 1 May 2023 to 24 December 2023 a full time employee will accrue 73.29 hours of annual leave.
For a typical 2 week shut down, there are 3 public holidays, so an employee will need to have 7 days (53.2 hours) of annual leave available to take covering a two week shut down.
In 2023, a two week shutdown over Christmas/New Year might look like this:
|Christmas Day Public Holiday
|Boxing Day Public Holiday
|New Years Day Public Holiday
For further expert advice on human resources or if you have any questions about anything HR related, get in touch.
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