Annual shutdown provisions in Modern Awards have been a common practice for many businesses in Australia, particularly during the Christmas and New Year periods. These provisions allow employers to shut down their operations for a set period, usually one or two weeks, without having to pay their employees for this time off. Instead, employees must use their annual leave entitlements to cover the shutdown period.
Effective 1 May 2023, updated rules will apply to annual leave during a temporary shutdown. During a shutdown, employers can require paid annual leave and must provide a minimum 28-day notice period to affected employees. The requirement to take annual leave must be reasonable, and the notice period can be reduced with agreement from most impacted employees. If an employee lacks sufficient paid annual leave, alternative options such as using accrued time off or taking leave without pay can be agreed upon. Public holidays occurring on an employee’s usual workdays during the shutdown period will be paid. To learn more, visit Direction to take annual leave during a shutdown.
Affected awards will now have updated rules on annual leave during a shutdown. To access the latest information regarding directions to take annual leave during a shutdown, visit our website. The affected awards cover various industries, including building and construction, hair and beauty, hospitality (including fast food and restaurants), and real estate.
To comply with the updated shutdown rules, employers and employees covered by the affected awards should be aware of the changes. Effective 1 May, the updated rules will apply to various industries, including Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award, Hair and Beauty Industry Award, Hospitality Industry (General) Award, and Real Estate Industry Award, among others.
Under the annual shutdown provisions, employers have the right to direct their employees to take annual leave during the shutdown period. If an employee does not have enough annual leave accrued to cover the entire shutdown period, the employer may require them to take unpaid leave for the remaining days. This means that employees may receive a reduced or no salary during the shutdown period, depending on their leave entitlements.
The purpose of annual shutdown provisions is to allow businesses to carry out maintenance and other necessary tasks during a period when operations are typically slower due to the festive season. It also allows employees to take a break from work and spend time with their families.
However, it is important to note that the annual shutdown provisions may vary depending on the specific Modern Award that applies to an employer and their employees. Some Modern Awards may not have annual shutdown provisions. In contrast, others may have different requirements, such as providing employees with notice of the shutdown period or paying them for a portion of the shutdown period.
Employers must ensure that they comply with the annual shutdown provisions of the relevant Modern Award and any other legal requirements. Failure to comply with these provisions could result in penalties and legal action against the employer. It is, therefore, advisable to seek professional advice or consult the relevant Modern Award to ensure compliance.
In conclusion, annual shutdown provisions in Modern Awards allow employers to shut down their businesses for a year without paying their employees for this time off. While these provisions can benefit employers and employees, complying with the relevant Modern Award and any other legal requirements is essential.
Suppose you’re an employer or employee who wants to learn more about the annual shutdown provisions in Modern Awards and how they apply to your specific situation. In that case, it’s important to seek professional guidance. Visit the Fairwork Ombudsman website or contact Katia Chehade today to schedule a consultation and ensure you are fully informed.