Changes took effect from 1st May 2023 in how you will now deal with the closedown periods – most commonly over the Christmas/ New Year period.
Special provisions in Awards relating to employers requiring employees to take annual leave during a shutdown period. Some employers use these provisions for shutdowns at other times of the year, but it is more common for a Christmas/New Year 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.
Under the new rules:
- employees can be required to take paid annual leave during a shutdown if it’s reasonable
- employers must provide written notice of the requirement prior to a shutdown
- employees who don’t have enough paid annual leave can choose to take leave without pay but they can’t be required to do so.
What about EBA’s
These changes will apply to most modern awards. Existing conditions in an enterprise agreement will likely 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.
What are an employer’s options?
As an employer, you’ll have three (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.
Who do the changes apply to?
These new rules apply to employees and employers covered by one of the affected awards. From 1 May, your award (as listed in the table below) will include the new rules for shutdowns.
WHAT DO YOU NEED TO DO?
Firstly for clarification – he 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 must be by agreement.
- Employers must 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.
Secondly – what should you be doing NOW?
- Check the award that applies to your employees to confirm what changes you need to make (see list above);
- Check and amend any policies you have, if needed, to reflect the award changes (drop us an email at paulette@freshhrinsights.com.au);
- Implement a process to control and manage the taking of annual leave to ensure that sufficient paid leave remains to cover a shutdown period.
- Ensure you manage annual leave balances to cover a Christmas/New Year shutdown period (have a log of hours tracked).
- Make sure that you have written agreements in place if an employee elects to take unpaid leave in the log of hours as per the above
- Consider if you can provide employees with work during a shutdown period if they don’t want to take their annual leave.
Example for clarification of what this pending Christmas/ New Year will look like :
From 1 May 2023 to 24 December 2023 a full-time employee will accrue 73.29 hours of annual leave. For a typical two-week shut-down, there are three public holidays, so an employee will need to have seven days (53.2 hours) of annual leave available to take, covering a two-week shutdown. In 2023, a two-week shutdown over Christmas/New Year might look like this:
