Christmas Shutdowns

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Posted October 19, 2023

Christmas Shutdowns

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.

 

Hair and Beauty Industry Award 2020

The NES permits modern awards and agreements to allow employers to direct employees to take annual leave if the requirement is reasonable.

The Hair and Beauty Industry Award 2020 has had the model clause inserted:

24.3 Direction to take annual leave during shutdown

(a) Clause 24.3 applies if an employer:

(i) intends to shut down all or part of its operation for a particular period (temporary shutdown period); and

(ii) wishes to require affected employees to take paid annual leave during that period.

(b) The employer must give the affected employees 28 days’ written notice of a temporary shutdown period, or any shorter period agreed between the employer and the majority of relevant employees.

(c) The employer must give written notice of a temporary shutdown period to any employee who is engaged after the notice is given under clause 24.3(b) and who will be affected by that period, as soon as reasonably practicable after the employee is engaged.

(d) The employer may direct the employee to take a period of paid annual leave to which the employee has accrued an entitlement during a temporary shutdown period.

(e) A direction by the employer under clause 24.3(d):

(i) must be in writing; and

(ii) must be reasonable.

(f) The employee must take paid annual leave in accordance with a direction under clause 24.3(d).

(g) In respect of any part of a temporary shutdown period which is not the subject of a direction under clause 24.3(d), an employer and employee may agree, in writing, for the employee to take leave without pay during that part of the temporary shutdown.

(h) An employee may take annual leave in advance during a temporary shutdown period in accordance with an agreement under clause 24.4.

(i) In determining the amount of paid annual leave to which an employee has accrued an entitlement, any period of paid annual leave taken in advance by the employee, in accordance with an agreement under clause 24.4, to which an entitlement has not been accrued, is to be taken into account.

(j) Clauses 24.6 to 24.8 do not apply to a period of annual leave that an employee is required to take during a temporary shutdown period in accordance with clause 24.3.

 

The key change as a result 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?

An employer must give employees 28 days’ written notice of a shutdown. By majority agreement, this notice can be shorter.

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 salon will shut down for the purposes of granting annual leave to employees, from the ordinary finishing time on Friday 22 December 2023. The salon will reopen 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 and an employee to take unpaid leave. This agreement should be in writing.

Alternatively, the employee could agree with the employer to take annual leave in advance.

More information

HABA members can call the HABA Advice Line on 02 9221 9911 to discuss this topic and other workplace relations issues.