Direction to take annual leave during shutdown
Previously if a business was having a shut down, for example between Christmas and New Year, an employer could direct an employee to use their annual leave for the duration of the shutdown, and if the employee did not have any annual leave accrued, the employer could lawfully direct them to take leave without pay.
From 1 May 2023, directing an employee to take unpaid leave during a shutdown will no longer be lawful and instead a new model clause entitled ‘Direction to take annual leave during shutdown’ will supersede the original provisions in 78 Modern Awards.
In summary, if an employer intends to shut down all or part of its operation for a particular period and wants their employees to take their paid annual leave during that period,
the employer needs to provide employees with 28 days’ written notice of the shutdown (or a shorter period if agreed between the employer and the majority of relevant employees).
the employer needs to provide employees who commence employment within the 28 day period before a shutdown (that will be effected by that period) with written notice as soon as reasonably practicable after they are engaged.
the employer may direct the employee to take a period of paid annual leave to which they have accrued an entitlement but the direction must be deemed reasonable and must be in writing. If this occurs, the employee must take paid annual leave in accordance with their employer’s direction.
If an employee has no annual leave, they can still take annual leave in advance, in accordance with their Award. They can also take leave without pay, if mutually agreement and in writing.
If an employee has no annual leave and does not wish to take leave without pay or annual leave in advance, the employer will need to pay the employee their normal salary for the shutdown period (or part thereof).
If your business if underpinned by this change, we encourage you to be proactive and plan for the office closure. Employers should:
ensure employees have enough leave in store to cover any shutdown period
consider putting Time in Lieu arrangements or using RDOs during this time (noting this would dependant on the relevant Award)
potentially offer annual leave in advance
find work for the employee to perform, or pay the employee for the period not covered by the accrued annual leave