As part of the four yearly review of modern awards, the Fair Work commission published a decision regarding shut downs back in December 2022. This decision has been in effect from 1st May this year, and brings about changes to shutdown periods that will impact many businesses across Australia. 

Although the changes have been in play since the first half of the year, many organisations only “shutdown” or “close down” at the end of the calendar year. Therefore, the lead up to Christmas and New Year is the first time they have had to take real notice of the changes and the impact this brings on their business. 

What is the change?

A new “model clause” was inserted into most modern awards, which now no longer allows an employer to direct an employee to take a period of unpaid leave during a temporary shutdown (ie. over Christmas and New Year). If an award covered employee does not have enough annual leave to cover the temporary shutdown period, the employer will be required to pay the employee during the temporary shutdown period if they do not require the employee to work. 

The new clause also requires employers to give written notice of the close down to all their impacted award covered employees. The most common notice time stipulated is 28 days or one month, however some awards state longer notice times of up to two or three months. Some common Awards and their associated written notice requirements are shown in the table below: 

Modern Award

Shutdown Written Notice Required

Banking, Finance & Insurance Award 2020

28 days

Building & Construction General On-site Award 2020

two months

General Retail Industry Award 2020

28 days

Miscellaneous Award 2020

one month

Meat Industry Award 2020

three months

Clerks Private Sector Award

28 days

Social, Community, Home Care and Disability Services Industry Award 2010 (SCHADS)

Silent

Manufacturing and Associated Industries and Occupations Award 2020

28 days

Professional Employees Award 2020

28 days

Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020

28 days

As an employer, what can I and cannot now do?

In essence, the changes mean that:

  • Employers must provide written notice of the temporary shutdown period (the time of the notice varies between awards, but it is more often than not 4 weeks or 28 days)
  • An employer can direct an employee with sufficient annual leave accrual to take a period of annual leave during a temporary shutdown period.
  • An employer can recieve written agreement from an employee to take annual leave in advance during a temporary shutdown period, where the award permits this. Many awards state that where an employee is provided annual leave in advance, a deduction can be made from their final pay if they are still in a negative leave balance when their employment ends. An employee is under no obligation to agree to take annual leave in advance.
  • An employer can get written agreement from an employee to take unpaid leave during a temporary shutdown period. An employee is under no obligation to agree to this.
  • An employer cannot direct an employee with insufficient leave to cover a temporary shutdown period to take leave in advance or unpaid leave.

What do I need to do to ensure my business remains compliant? 

  • Decide if all or part of your company’s operation needs to shut down temporarily over Christmas.
  • If they do, confirm the temporary shutdown period dates. 
  • Check the Modern Awards that apply to your business and take note of the required written notice time.
  • Communicate the temporary shutdown period to all impacted employees, ensuring you remain compliant with the written notice provisions stipulated in the applicable awards.
  • Monitor the annual leave accruals of your employees, particularly in the lead up to the temporary shutdown.
  • Separately communicate to those you are directing to take annual leave.
  • Ensure you have written agreements in place for any employees who have agreed to take leave in advance or leave without pay. 
  • Be aware of the Fair Work provisions in the Fair Work Act around the refusing of annual leave
  • For any employees who require to be paid during the shutdown time, arrange for ordinary pay to be paid.

Summary

It is essential for businesses to stay updated on new legislation surrounding annual leave and subsequent shutdown periods. Each industry may vary in their responsibilities, but every business must adhere to the standard set across Australia. This makes it essential that businesses know which Modern Awards apply to them, and contact legal or HR experts when uncertain about these compliance requirements.

About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, workplace safety, legal services, payroll solutions, migration, human resource management and HR software.

 

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.

 

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