Xmas shut-downs: what every employer should know


Xmas shut-downs: what every employer should know

Employers who close down over the Christmas-New Year period must ensure adequate notice is given and correct entitlements are paid.

Many employers opt to close down their business over the Christmas-New Year period and send workers on annual leave.

The reasons for doing so vary – industry custom and practice, operational requirements (clients or suppliers have closed), routine maintenance of plant and equipment or because most staff usually request annual leave during this period as it coincides with school holidays.
The right of an employer to send an employee on an annual close-down is subject to the terms of the applicable modern award, enterprise agreement or, in the case of an award/agreement-free employee, the National Employment Standards.

Generally, an employer is required to give employees the prescribed period of notice of a close- down. A close-down for annual leave over the Christmas-New Year period will also be affected by several statutory public holidays.

Public holidays – Christmas-New Year period 2017-18

The public holidays in all states and territories for the Christmas-New Year period are:
  • Christmas Day – Monday 25 December
  • Boxing Day (Proclamation Day in South Australia) – Tuesday 26 December
  • New Year’s Day – Monday 1 January 2018
  • Australia Day – Friday 26 January 2018
 In South Australia and Northern Territory, the respective governments have gazetted the following half-day public holidays:
  • Christmas Eve – Sunday 24 December – from 7pm to midnight
  • New Year’s Eve – Sunday 31 December  – from 7pm to midnight 

Annual close-down: award/agreement-free employees

The Fair Work Act (s94(5)) provides that an employer may require an award/agreement-free employee to take a period of paid annual leave, but only if the request is reasonable.

Section 94(5)(b) provides examples of a reasonable request by the employer, such as an employer’s business being shut down for a period, such as over the Christmas-New Year period.

Matters that can be agreed between an employer and an award/agreement-free employee include:
  • that paid annual leave may be taken in advance of accrual (when the period of the close-down exceeds an employee’s annual leave accrual)
  • that a specified period of notice must be given before taking annual leave (e.g. four weeks’ notice)
  • the form of application for paid annual leave.

Modern awards

Most modern awards contain terms that permit an employer to require an employee to take annual leave as part of a close-down.

In addition, an employer and employee may agree in writing to take annual leave in advance, such as where an employee has insufficient accrual of annual leave to cover (say) the period of an annual close-down.

The applicable award may also provide that if, on termination of employment, an employee has not accrued an entitlement to cover the period of annual leave taken in advance, an employer may deduct from any money due on termination the deficit between accrued annual leave and annual leave taken in advance.

The terms of the applicable modern award should be noted to determine whether annual close-down is permitted.

Notice of annual close down

Most modern awards require an employer to give four weeks’ notice of the intention to close down for annual leave. However, some awards may require a longer period of notice.

For example, the Textile, Clothing, Footwear and Associated Industries Award 2010 requires an employer to give three months’ notice of the intention of implementing an annual close-down. Reference should be made to the applicable modern award to determine the relevant period of notice required to be given to employees when the business is closing down for annual leave.

Other periods of paid leave

Under the Fair Work Act (s89(2)), if the period of the close-down includes any other paid leave, such as a public holiday, personal/carer’s leave, compassionate leave or community service leave, the employee is not taken to be on paid annual leave for the period of the other leave.

This provision applies to leave entitlements under the National Employment Standards (except unpaid parental leave).

Long service leave

A state or territory long service leave statute will usually provide that a period of long service leave and paid annual leave cannot be taken concurrently. Therefore, if an annual close-down coincides with an employee’s absence on long service leave, an employee is deemed to be absent on long service leave and not paid annual leave.

The bottom line: Most modern awards contain terms which permit an employer to close down a business for the purposes of taking annual leave. There is also some protection for an employer where an employee takes annual leave in advance and terminates before the employee has accrued sufficient annual leave to cover the leave taken in advance.

Generally, an employee is taken to be on a form of paid leave other than annual leave where two forms of paid leave coincide.

See also: Do Christmas shut-downs breed resentment?
Our resource on Christmas-New Year holiday period


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