Many businesses choose to shut down or operate a skeleton staff over between Christmas and the New Year. Reasons include that it is traditionally a quiet trading period or custom and practice to allow staff to recuperate and have a break. Whatever the reason, shut downs must occur in line with certain provisions otherwise businesses may face the consequences with fines up to $12,600 for individuals and $63,000 if governed by the Fair Work Act 2009 (Cth) (the Act).
Enforcing a Shut Down
National system employers (generally those who are Pty Ltd or Inc and are financial corporations or conduct trading activities etc.) may require employees to take annual leave during a period of shut down if any of the following criteria are satisfied:
- The employees are award/agreement free and the requirement is reasonable (such as a shutdown between Christmas and the New Year; and
- The employees are covered by an award or agreement and the industrial instrument contains provisions that enable the employer to direct employees to take annual leave during a shutdown period.
Employees may be covered by an award or agreement that does not contain provisions surrounding the taking of leave during a period of shutdown. If so, the two parties can agree for the employee to access annual leave in advance or be granted leave without pay. If an agreement cannot be made, the employee must be paid for their ordinary contracted hours of work for the shutdown period.
Employers should note that it may be difficult to recoup annual leave that is granted in advance to employees if they resign and leave before making up the deficit. Instead, they should aim to make employees aware of any shutdown periods upon commencement of employment. Employees should also be encouraged to manage their annual leave so that they have sufficient accruals to cover the period of a shut down.
Public Holiday Considerations
If an employee is accessing any form of paid leave during a period of shutdown and that period contains a public holiday, the employee will not be taken to be on annual leave during the public holiday. They will instead be paid for the ordinary hours they would have worked on that day, if not for the public holiday.
Some employers may request that their employees work on a public holiday. This is permitted by the Act provided that the request is reasonable. Employers should consider the following when determining the reasonableness of a request:
- the nature of the enterprise (e.g. operational requirements);
- the employee’s personal circumstances (e.g. family responsibilities);
- whether the employee will be compensated for working unsociable hours (e.g. will they receive penalty rates, overtime or time off in lieu);
- the type of employment (are they full-time, part-time, casual?);
- the amount of notice given of the requirement to work as well as the amount of notice given for a refusal; and
- other contextual factors, such as what is agreed in the contract of employment.
Managing Annual Leave Requests
The Act provides that paid annual leave may be taken by agreement between the employer and employee. Additionally, an employer must not unreasonably refuse a request to take paid annual leave. A request can only be refused on reasonable grounds.
If an employer has received multiple requests for annual leave in the same period and it is not practicable to grant them all, there may be grounds for refusal. CCI recommends taking into consideration other circumstantial factors, such as who requested their annual leave for the period first. Employers should be wary not to refuse leave on discriminatory grounds, such as family responsibility, illness or injury, age, gender and so on.
Some employers such as retailers are busiest during the Christmas period as it is their peak season. Accordingly, it may not be operationally viable to grant requests for annual leave during this time. If this is the case, employers should ensure that their stance is reinforced in the contract of employment that is ideally supplemented with a leave policy. Notwithstanding, requests should still be considered on a case-by-case basis.
State System Employers
The above information is relevant to national system employers. While many of the requirements above are similar for employers and employees operating in the state industrial relations system, there are subtle differences. It is therefore recommended the employers seek professional advice on these matters before acting.
If you would like more information on this subject or any other matters, contact the CCI Employee Relations Advice Centre on (08) 9365 7660 or email firstname.lastname@example.org