Businesses face higher labour expenses due to shutdown period changes
In most cases, employers can no longer direct staff to take unpaid leave during shutdown periods, including Christmas.
This change comes from the Fair Work Commission’s (FWC) decision to review modern awards, which saw it introduce a model term for shutdowns that affects 78 awards.
However, employers and employees can mutually agree for the staff member to take unpaid leave during a temporary shutdown period.
This change, which took effect on 1 May 2023, means businesses will experience greater expenses in their labour budgets when an employee does not have enough annual leave available and does not agree to take unpaid leave.
Previously, different shutdown provisions applied depending on which award the business was covered by, making it difficult to implement a consistent approach within a business where multiple awards apply.
As taking unpaid leave during a shutdown period is now by mutual agreement, employers may need to pay ordinary hours wages or find reasonable duties for employees who do not have enough annual leave accrual to cover the shutdown period, unless they agree to take unpaid leave.
Employers must provide 28 days’ written notice of their intention to shut down temporarily (individual awards with an existing term that requires a greater period of notice to be given will be retained). Shorter notice may be agreed upon between the employer and majority of employees.
When combined with the more recent public holiday decision confirming employees have a right to reasonably refuse working on a public holiday, this holiday season could be a tough one to navigate for employers. Be proactive and reach out to us today to have your employment contracts and policies reviewed ahead of the holidays.
Where to start?
Businesses are encouraged to plan to avoid last-minute expenses.
Some key recommendations include:
- Check your award and whether this change applies to you;
- Make sure your leave policy refers to your shutdown period; and
- Send an email reminder a few weeks prior to notify staff of your shutdown.
- Doing this will help remind staff that you have a break coming up. This is important, as it will allow most staff to plan their leave and ensure you adhere to your award. This is because most awards require you notify staff within a certain time – eg., four weeks’ notice in writing.
- Have reasonable duties available as a backup in the event circumstances change for your employee or if you hire a new employee with little leave balance.
Is your award affected?
Find the full list of awards that are being affected here.