With Christmas fast approaching, businesses who plan to implement a Christmas close down should be aware of their obligations to employees, particularly giving them any required period of notice relating to the close down.

In this article we explore some common questions including whether employees can be required to take annual leave or unpaid leave during this period.

I am closing my business in the Christmas period, can I require employees to take annual leave?

For employees covered by a modern award or enterprise agreement, employers can require employees to take annual leave if this is permitted by an award or enterprise agreement, so long as they follow the procedure set out in the award / agreement. These will often require that a period of notice is given.

For example, clause 35.3 of the Restaurant Industry Award 2010 states:

“An employer may require an employee to take annual leave as part of a close-down of its operations, by giving at least four weeks’ notice.”

Virtually identical provisions are found in the Hospitality Industry (General) Award 2010, the General Retail Industry Award 2010 and the Clerks – Private Sector Award 2010.

If the award or agreement is silent on the issue – such as the Fast Food Industry Award 2010 – employers cannot require employees to take annual leave in this circumstance. However, you may be able to agree with employees that they will take a period of annual (or unpaid) leave.

For employees who are not covered by an award or agreement the usual rules relating to directing employees to take annual leave in the Fair Work Act 2009 apply (see section 94(5)). These state that an employer can only require an employee to take annual leave when the requirement is reasonable. The Fair Work Act 2009 lists a requirement to take annual leave due to a Christmas close down as an example of a reasonable direction.

For all employees, employers should also follow any provisions in their employment contracts that deal with a Christmas close down.

As a reminder, casual employees are not entitled to annual leave, so there should be no issue in not rostering them during a Christmas shut down.

What if my employees don’t have sufficient annual leave for the period the business is shut?

For employees covered by an award or an agreement, the award / agreement may contain provisions dealing with this issue.

For example, the Manufacturing and Associated Industries and Occupations Award 2010 states at clause 41.10(c):

“an employee who has not accrued sufficient leave to cover part or all of the close down, is allowed paid leave for the period for which they have accrued sufficient leave and given unpaid leave for the remainder of the closedown.”

If the award or agreement is silent on this matter, you could consider trying to agree with the employees to take unpaid leave or annual leave in advance (so long as this is not prohibited by the award or agreement).

If agreement cannot be reached, employees will be entitled to their usual wages for this period.

For employees not covered by an award or an agreement, there is no general right to require employees to take unpaid leave or annual leave in advance. Where no agreement can be reached, they should be paid their usual wages.

Need help?

Not sure which award covers your employees or what your obligations are regarding Christmas close downs? At Employment Innovations, we have a team of industry experts who can assist you with these questions. You can also access unlimited workplace advice as part of our subscription products to ensure compliance.