This year has seen legislative changes to employment law coming in faster than a new trend on Tik Tok. This one is a biggie for businesses who have a shutdown period and as many of you are planning a temporary workplace shutdown across the Christmas period, you need to factor in this change to ensure compliance with this update.  

As of 1 May this year, the Fair Work Commission updated seventy-eight (78) Awards to prevent any employer from forcing an employee to take a period of unpaid leave during an annual shutdown period if the employee has not accrued sufficient leave to cover the period.

Basically, the Fair Work Commission (FWC) concluded that the provisions in question were not in line with the Fair Work Act.  The FWC determined that it was unfair to allow employers to mandate employees take unpaid leave during a shutdown without any constraints on reasonableness, particularly when the employee has no entitlement to take or request leave without pay.

But we need a shutdown period, how can we manage this? 

Don’t worry, you can still have your shutdown, but you are going to need to look at how you manage annual leave requests or determine how you will address those employees who don’t have enough paid leave accrued to cover a shutdown period.   Now that we’re on the home stretch to the Christmas break that most businesses take, it’s important to remind you of the new legislation…..

Key to the change is that an employee who does not agree to take a period of unpaid leave must be paid for any days that are not covered by their annual leave, or you will need to allow them to return to work earlier. You can request for the employee to take leave in advance, however they do not have to agree (i.e. go into negative leave).

Back when the legislation was introduced, we provided you with the following information on how you could try and mitigate the risk and issue in your business. These are still valid ideas that you can implement, though if you haven’t done anything in readiness for this year, you may still face some issues…

Recommendations on how to manage workplace shut downs

Because securing agreement to take a period of unpaid leave at the time is not easy to achieve, we recommended some or all of the following strategies:

• Have an application form that all candidates complete when they apply for a position with you. Include an explicit paragraph that states the employee agrees to take unpaid leave at the shutdown period if sufficient paid leave has not yet been accrued. This is extremely important for any employees commencing part way into a new year, especially if you have a long shut down period.

• Include an explicit paragraph on your annual leave application form that requires employees to agree to take a period of unpaid leave during the shutdown period, if taking the current requested leave during the year will leave them short of leave to cover the shutdown period.

• Do not allow the use of paid annual leave throughout the year, so paid leave entitlements are preserved for the shutdown period but allow people to take a period of unpaid leave throughout the year at their request. (However, an employer may not refuse a reasonable request to take annual leave if business operations permit, so use this option sparingly).

What to do

If you haven’t taken any action to introduce any changes, now is a good time for you to review your own current situation. We recommend you review each employee and their current leave entitlements, and assess those against the period you are shutting down for. If you have any employees that are going to fall short, we suggest coming up with an action plan now, which might include:

• Asking the employee to agree to take some of the period as leave without pay
  
• Allowing the employee to go into negative leave
  
• Bringing the employee back earlier, and having a list of tasks that can be completed during the early return from leave

Generally, while common in the construction and allied industries, the Fair Work Commission will likely take a dim view of any employer forcing employees to take all their accrued annual leave each year at the Christmas shutdown period. Therefore, we recommend minimising the shutdown period as much as possible –two weeks if you can, three weeks at most, and avoid 4 weeks if viable.

In addition, every Award requires employers to provide all employees with a reasonable notice period when it comes to any shutdown period and you will need to check your relevant Award/s for specifics.  We always recommend the longer the notice period, the better so do your business planning well in advance and get the dates of the forced leave out to your team so they can make plans to use their leave to best benefit them.

If you need help navigating these changes or setting up your processes and policies in order to manage these changes, or if you have a particularly tricky situation to manage as we get closer to end of the year, please contact the HR Staff n’ Stuff team now.