By David Bates

Most Australian businesses close down for at least part of the Christmas/New year period, however, very few employers take the time to carefully review their legal obligations before confirming arrangements with their employees.

This in turn can lead to serious breaches of applicable Modern Awards, and even potential back payments and penalties being imposed.

Confusion regarding employee entitlements during annual shut downs is a consequence of the complex rules imposed by many of the 100+ industry and occupation-based Modern Awards which currently apply across the country.

Here are just some of the key points Fair Work-covered employers should keep in mind if they’re planning to shut down this Christmas:

  • Full-time and part-time employees often need to be paid their usual wage/salary during Christmas shutdowns. Specific rules may also be imposed by any applicable Modern Award(s) or Enterprise Agreement(s). 
  • In some cases, employees can be asked to take annual leave during the Christmas shutdown. However, if an employee is covered by a Modern Award or an Enterprise Agreement, you can only direct the employee to use their annual leave during the shutdown if this is expressly permitted by that Award or Agreement. 
  • If an employee is not covered by a Modern Award, they can be directed to take annual leave only if that direction is ‘reasonable’ in the circumstances.
  • If an employee doesn’t have enough accrued annual leave to cover the entire shut-down period, you may be required by an applicable Modern Award or Enterprise Agreement to offer them paid annual leave in advance.

However – and even more confusingly – many employees have the legal right to decline annual leave in advance, and in this case the employee may become entitled to receive their usual wage/salary for the entire period.

  • Many Modern Awards require the employer to provide their employees with a minimum period of advance notice before a shut down. Failing to provide notice when it’s required can invalidate the employer’s request, and result in all employees being entitled to payment as usual.

Confused yet?!

Sadly, unless and until someone (anyone!) fixes this mad array of overlapping rules and regulations, Australian employers will continue finding themselves on the receiving end of complaints and penalties once the Christmas spirit fades for another year.