The Fair Work Commission has made significant changes regarding an employer’s right to direct employees to take leave during a temporary shutdown (such as during the Easter or Christmas holiday period).

As of 1 May 2023, employees who don’t have sufficient annual leave accrued will no longer be legally required to take leave without pay to cover a temporary shutdown period.

Who does this change apply to?

This amendment applies to all employees who are covered by Modern Awards. Businesses that currently have an Enterprise Agreement in place are not affected by this change, however, it is likely that any new Agreements lodged with the Fair Work Commission in the future will be required to include these changes to the shutdown provisions.

What implications does this have for employers?

If your business is planning on a temporary shutdown, you are now required to follow a number of directives.

1. You must give affected employees at least 28 days’ notice of any shutdown period. This notice period can be shorter if agreed to by all parties.
2. If your employee has an accrued annual leave entitlement, you can direct (in writing) for the employee to take annual leave during the shutdown period.
3. The requirement to take annual leave must be considered to be reasonable.
4. If an employee does not have sufficient annual leave accrued to cover the shutdown period, if agreed to in writing, the employee may take leave without pay or annual leave in advance during the shutdown period. However, they are not legally required to take leave without pay.

What options are there if an employee doesn’t have sufficient leave and does not agree to leave without pay?

If an employee doesn’t have sufficient leave accrued and doesn’t agree to leave without pay over the shutdown period, you have two options:

1. Continue to pay your employee for the duration of the shutdown period (with no days counted as leave), and direct them not to attend work (i.e paid leave); OR
2. Require the employee to work during the shutdown period, paid at their standard rate of pay, and find suitable work for them to complete over this shutdown period.

How can your business prepare for this change?

If your business has set shutdown periods each year (for example, between Christmas and New Year), it’s important to be prepared well in advance. All requests for annual leave should be carefully considered to ensure that employees have sufficient annual leave to cover any planned shutdown periods.

If employees are hired close to the shutdown period and don’t have the chance to accrue sufficient leave, you can seek their agreement in advance to take leave without pay during the shutdown. It is important however that this request is not presented as a condition of employment, but instead a personal decision for the employee to make.

Need some advice?

If your business utilises temporary shutdown periods and would like some tailored advice on how to manage these changes, the Common Goal Consulting team can help.

Call Director Nikki Jenkinson on 0472 545 584 or send an email to projects@commongoalconsulting.com.au for more information.