Earlier this year, the Fair Work Commission (FWC) varied the annual leave shutdown provisions in modern awards and replaced them with a model annual leave shutdown clause. Please refer to our article in February on the Annual Leave Shutdown Provisions.
With the Christmas period soon upon us, many businesses will be considering whether to shut down and for how long. Strict rules apply for shutdowns, so everyone needs to be prepared.
The rules governing periods of shutdown for employers and employees under the national workplace relations system are set out in the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act) and modern awards or enterprise agreements.
Award/agreement covered employees
The NES permits modern awards and agreements to allow employers to direct employees to take annual leave if the requirement is reasonable.
Many modern awards include such provisions in relation to annual shutdowns and most have had either the model clause or a slightly modified version of the model clause inserted.
The key change because of the model clause being inserted is that employers no longer have the ability to direct employees onto unpaid leave during a shutdown. Instead, the model clause allows an employer and an employee to agree to a period of unpaid leave as part of a shutdown period.
How much notice does an employer have to give employees of a shutdown period?
Under the model clause, an employer must give employees 28 days’ written notice of a shutdown. By majority agreement, this notice can be shorter.
Employers are encouraged to check the relevant modern award that applies to their staff to confirm their obligations.
Is there a template shutdown notice?
The following is an example of a notice to employees of a shutdown:
Christmas/New Year shutdown
Employees are advised that the company’s operations will shut down for the purposes of granting annual leave to employees (other than those employees specifically notified to the contrary), from the ordinary finishing time on Friday 22 December 2023. Work will resume at the normal starting time on Tuesday 2 January 2024.
What if an employee does not have enough annual leave to cover a shutdown period?
As mentioned above, agreement can be reached between an employer or an employee to take unpaid leave. This agreement should be in writing.
Alternatively, the employee could agree to use other forms of leave to cover the period such as taking any accrued RDOs or taking annual leave in advance.