Many industry awards currently feature clauses that allow employers to instruct employees to take unpaid leave or utilize leave in advance if they don’t have enough annual leave to cover a temporary shutdown period, such as the Christmas and New Year break.

In August 2022, the Fair Work Commission (FWC) conducted a comprehensive review of these provisions and concluded that 78 awards should be revised to incorporate a model shutdown provision, which will replace the existing shutdown clauses found in those awards.

The rationale behind this change stem from the FWC’s assessment that such provisions are inconsistent with the Fair Work Act. It was deemed unfair for an employer to compel an employee to take unpaid leave during a shutdown period without any requirements for reasonableness, particularly when the employee has no entitlement to request or take leave without pay.

Updates to awards: a summary

New provisions apply from 1 May 2023 for many awards, that now specify:

  1. Employers must provided affected employess with a 28-day notice period,
  2. Reasonableness of requests and the ability to require staff to take Annual Leave or Leave Without Pay, and
  3. What occurs if a staff member does not have a sufficient Annual Leave balance.

If your award allows it, you can direct your employees to take annual leave or in some instances leave without pay:

  • During a temporary shutdown
  • Where the employee has accumulated excess annual leave.

For award free employees there are also some conditions to meet prior to requiring a staff member to take leave (paid or unpaid).

A Temporary Shutdown is different from a Stand Down and will affect entitlements differently and whether ordinary pay is to be maintained or not.

1. 28 Day Notice Period

Asking staff to take annual leave (or leave without pay if they don’t have entitlements) during a shutdown, must be in writing. Affected employees should be given at least 28-days written notice. Notice period may be shorter IF the majority of affected employees and their employer agrees.

Where a new employee is hired or commences within the 28 day notice period, they should be notified as soon as is reasonably practicable.

2. Reasonableness of the request

The written notice must outline the companies reasonable business grounds behind the decision for the temporary shutdown period. The business should also consider the leave balances of the employees in establishing these reasonable business grounds.

3. Insufficient Annual Leave Balances

If an employee does not have enough paid annual leave to cover all the days of the shutdown, the employee and employer can agree to consider:

  • Utilising Time in Lieu or RDO’s
  • Annual Leave in advance
  • Leave without Pay

Permanent employees must be paid for any public holidays that fall on a normal work day during any temporary shutdown period.

An employee will continue to accumulate annual leave during a shutdown period, unless they’re taking leave without pay.

Remember – paying above the Award does not exempt you from the provisions of the Award. Checking your Award and it’s clauses is a great way to ensure you meet your compliance requirements.

Not sure if this affects you or do you need a standard letter template to provide to your employees? Give Wendy our Director at GPHR a call, or send a quick email to discuss your requirements further: