New Rules For Annual Leaves During Temporary Shutdown Periods

Employers will need to implement new changes that will affect how they handle annual leaves during temporary shutdown periods such as Christmas and New Year starting May 2023.

The Fair Work Commission has updated 78 modern awards (including the Plumbing and Fire Sprinklers Award 2020 and Clerks-Private Sector Award 2020), replacing existing shutdown clauses with a new model term. This addresses issues related to directing employees to take a period of annual leave during shutdowns and aims to ensure that the existing shutdown clauses are in line with the modern award objectives stated in the Fair Work Act.

The Full Bench of the Commission found that existing shutdown clauses allowed employers to direct employees to take leave without pay, which was not provided for in the National Employment Standards or any modern award. The new model term eliminates this.

Instead, during a temporary shutdown period:

• An employee can take paid annual leave and use their entitlement; or
• The employer and employee can agree, in writing, to take unpaid leave during a temporary shutdown period once an employee’s paid annual leave has been exhausted.
• Where an employee has not accrued enough paid annul leave to cover the period of the temporary shutdown, the employee may take paid annual leave in advance of accruing the entitlement in accordance with the existing annual leave contained in each award.

The new shutdown clause also requires employers to provide a written notice at least 28 days before the temporary shutdown period. A longer period is required if the term preserves an existing longer period of notice, such as in the Plumbing and Fire Sprinklers Award 2020 being 2 months.

If an employee is engaged within the 28-day (or longer) notice period, notice of the temporary shutdown must be provided as soon as reasonably practicable after engagement.

Employers must review their current procedures and guidelines for annual shutdowns, update materials relating to award-covered employees, and update payroll and employee management systems to ensure compliance with the incoming changes.

If you have any questions, please contact our HR team on 07 3273 0800.