Annual Shutdowns

Many businesses have a scheduled period of closing business operations during the Christmas and New Year period.

How an employer must treat this depends on the award or agreement the employee is governed by.

These guidelines apply to permanent employees—casual employees do not have to be paid during a scheduled shut down.

1. Award or Agreement allows employer to direct leave

If the award or agreement provides for the employer to direct leave to be taken at specific times, then the employer can do this so long as they follow the guidelines about how much notice is required.

Example: The Clerks Private Sector Award does allow employers to direct employees to take leave during an annual shutdown, and they must be given at least 4 weeks’ notice (before the first day of leave), in writing.

What if the employee doesn’t have enough leave?

The employer can agree to pay annual leave in advance or the employee can take unpaid leave. However, from FairWork: “If an employee doesn’t agree to either, they have to be paid their ordinary pay rate for the shutdown. They can’t be forced to take unpaid leave”.

2. Award or agreement is silent

If the award or agreement is silent on the issue, then the employer may not force an employee to use their leave during a scheduled closure. The employer can negotiate with the employee to take paid or unpaid leave, or half pay leave if the award/agreement allows this.

3. The employee is not covered by an award or agreement

Note that this is rare – the majority of employees are governed by an award.

If there truly is no award or agreement governing the employee, then the employer can direct the employee to take leave if the direction is ‘reasonable’. See below for detail on what is ‘reasonable’.

4. Public holidays during leave

Public holidays that fall during a period of paid leave are always paid as normal work days; they should not be taken as annual leave days. If an employee usually works a given number of ordinary hours and overtime hours, then they will be paid only for the ordinary hours on a public holiday, they will not be paid for the usual overtime hours. If a public holiday falls during a period of agreed unpaid leave, the public holiday is not paid.

What is ‘Reasonable’?

From FairWork Best Practice Guidelines: “What is ‘reasonable’ will depend on factors such as the kind of business run by the employer, the nature of the work performed by the employee, the employee’s personal circumstances (including family responsibilities) and how much notice was given to the employee”.

An employer can refuse a request from an employee if they do not feel it is reasonable; this applies also to the employee refusing a request from an employer they do not feel is reasonable.

This will be governed by factors such as: the effect on the workplace and the employer’s business of approving the request, including the costs of doing so and negative impacts on efficiency, productivity or customer service; the inability to organise work among existing staff; and, the inability to recruit a new employee or the practicality or otherwise of the arrangements that may need to be put in place to accommodate the request.

Related References

• ICB – Business Information Sheet Payroll and FairWork
• ICB – Guide to Employer Obligations
• ICB – Payroll Resources
• ICB – Public Holidays
• FairWork – Small Business Best Practice Guidelines
• FairWork – 5 Things you Should know about Public Holidays
• FairWork – Annual Shutdowns

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