Can an Employer Direct and Employee to Take Leave During a Shut Down Period?
A shut down can occur where an employer temporarily shuts down its workplace. Typically, a shut down can occur during slow business periods. For some businesses, particularly in manufacturing or offices this may occur at Christmas or New Year.
A shut down isn’t the same as a stand down. A stand down is when an employer sends employees home if there is no useful work for them to do. Reasons for stand down include events out of the employer’s control like a natural disaster.
Accumulating annual leave during a shut down – An employee will continue to accumulate annual leave only when on paid leave during a shut down.
Can an Employer Direct an Employee to take Leave during a Shut Down Period?
An employer can require an award free employee to take annual leave during a period of shut down; however the requirement must be reasonable.
The factors that can be taken into account in the consideration of what is reasonable are:
- The needs of both the employee and the employer’s business;
- Any arrangements made between employer and employee;
- The timing of the direction to take the annual leave; and
- The reasonableness of the period of notice given to the employee to take leave.
Does the Employee have to take Leave during the Shutdown Period?
An employer can require an employee to take leave in the shut down period if this requirement is provided for in an applicable Modern Award, Enterprise Agreement or contract of employment. However, a certain period of notice may be designated in the industrial instrument.
For example, the General Retail Modern Award 2012, at clause 32 provides that an employer may require that an employee take annual leave during a period of shut down in operations by giving at least 4 weeks’ notice.
What if The Employee does not have enough Annual Leave Accrued at the time of the Shut Down?
An employer can request and an employee can agree to take annual leave in advance or the employee can take unpaid leave during the shut down period.
Here are some facts on other Awards
Fast Food Industry Award 2010 [MA000003] – Employees can’t be directed to take annual leave during a shut down under the Fast Food Award. An employee can still agree to take annual leave, annual leave in advance or unpaid leave during a shut down. However, if they don’t agree, they have to be paid their ordinary pay rate for the shut down. They can’t be forced to take unpaid leave.
Clerks – Private Sector Award 2010 [MA000002]. – Employees can be directed to take annual leave during a shut down. They have to be given at least 4 weeks notice before the leave needs to be taken. If an employee doesn’t have enough leave to cover the shutdown, they can agree with the employer to take:
- annual leave in advance or
- unpaid leave.
If an employee doesn’t agree to either, they have to be paid their ordinary pay rate for the shut down. They can’t be forced to take unpaid leave.
Children’s Services Award 2010 [MA000120]. – Employees can be directed to take annual leave during a shut down over Christmas. If an employee doesn’t have enough leave to cover this shut down, they will have to:
- take all of their accrued paid leave
- take unpaid leave for a maximum of 4 weeks or
- agree with their employer to take annual leave either wholly or partly in advance.
Non-Christmas shut down
Employees can also be directed to take annual leave during a shut down when a business is open for more than 48 weeks in a year. They have to be given at least 4 weeks notice before the leave needs to be taken. If an employee doesn’t have enough annual leave to cover the shutdown, they can agree with the employer to take:
- annual leave in advance or
- unpaid leave.
If an employee doesn’t agree to either and there is no work available, they have to be paid their ordinary pay rate for the shut down. They can’t be forced to take unpaid leave.
Follow these steps – as recommended by Fair Work
Suggested steps for preparing a letter of notice of requirement to take annual leave for purpose of close down
Step 1: Check your modern award – You can only require employees to take annual leave during a close down period if it is allowed under your modern award. Check your modern award carefully to see if it includes this provision, and if there are any other requirements or conditions you must fulfill, such as providing notice.
Step 2: Talk to the employees – You should meet with your employees to advise them of the close down period and give them the opportunity to ask questions. You should ensure that the employees understand:
- the reason for the close down (e.g. Christmas holidays, renovation)
- the length of the close down
- that they will receive paid annual leave during the close down, and
- that this annual leave will be deducted from their accrued entitlements.
Step 3: Create your letter of notice of requirement to take annual leave for purpose of close down – You must provide your employees with at least 4 weeks’ written notice of the requirement to take annual leave during a close down period. This notice should include the dates the close down period will start and finish, and the reason for the close down.
Step 4: Provide the letter to the employee and keep a copy for your records – Provide the letter to the employee, ensuring they receive it at least 4 weeks before the start of the close down period. You should also keep a copy of the letter for your records.
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