Cheers and Fears Series Article 2 – Annual Shutdowns, Annual Leave and Public Holidays

With the year coming to an end, employers are starting to think about their annual shutdown and getting excited about taking a well-deserved break.

In this article, we provide a summary of the relevant information regarding annual shutdowns, annual leave, and public holidays.  We note that many of the issues discussed in this article will be dependent on the following:

• any applicable Award or Enterprise Agreement;
• the contract of employment; and
• applicable company policies.

Annual Shutdowns

A shutdown period is common for many workplaces and usually spans from the last working day before Christmas through to the first few weeks of January.

The question for most employers is whether they can direct their employees to take their annual leave during the shutdown period.  

The answer to this question is, it depends.

If an employee is covered by an award or enterprise agreement that allows the employer to direct the employee to take annual leave during a shutdown, then the employer can direct the employee to take annual leave, provided the direction is reasonable, is in writing and complies with any notice requirements.

If the employee is not covered by an award or enterprise agreement, then you may direct them to take their annual leave during a shutdown if the direction is reasonable.  We recommend the inclusion of specific provisions in employment contracts for award and enterprise agreement free employees, which require them to take leave during the annual shutdown.

For the above reasons, it is imperative that employers check the relevant award or enterprise agreement that applies to their employees to ensure it contains a provision for a direction to take leave during a shutdown. If it does not, such direction cannot be given.

If there is no provision allowing the employer to direct an employee to take annual leave during the shutdown, then the leave will generally be unpaid unless the employee requests to use their accrued annual leave.

Annual Leave in Advance

When planning for a business shutdown, it is important to consider how leave entitlements will be managed for all employees.

For part-time and full-time employees who may not have accrued enough leave to cover an entire shutdown period, you may wish to consider payment of annual leave in advance. 

There is no requirement to pay annual leave in advance;  however, an employer may still do so if they wish.  

All annual leave in advance should be confirmed in writing and, where possible, let the employee know when they will be in a positive annual leave position upon their return to work in the new year.

Public Holiday

This year Christmas Day and New Year’s Day both fall on Thursdays. Employees are generally entitled to be absent from work on any day that is a public holiday, unless they are reasonably requested to work. 

For businesses that remain open across these public holidays, it is important to remember the process that must occur before an employee can be reasonably requested to work:

1. the employer must request the employee work on the public holiday;
2. the employee is required to respond to the request; 
3. if the employee refuses, the employer must consider the reason for the refusal;
4. if the refusal is unreasonable, the employee can be directed to work on the public holiday.

If employees are required to work on a public holiday, employers should check the relevant employment instrument to confirm any requirements for extra pay, or time off in lieu arrangements that may be in place.

If you have any questions regarding the above or need assistance in understanding your obligations for the upcoming festive season, please contact us on:
Telephone: (02) 9058 4930
Email: office@ndlaw.com.au

This article was prepared by:

Disclaimer: This publication has been provided for general guidance only and does not constitute professional legal advice. You should obtain professional legal advice before acting on information contained in this article.