The end of 2016 is fast approaching and now is the time to start thinking about what happens over Christmas and the New Year. Many businesses often Shutting down over Christmas or run on skeleton staff during the Christmas and New Year period. How employees are paid over this period depends on the award or agreement they’re covered by, and whether they’re working or on leave.

Directing an employee to take annual leave

An employee can be directed to take annual leave during a shut down if their award or enterprise agreement allows it.

Most awards have rules about how and when an employer can direct an employee to take leave. For example, an employer may need to give the employee a set amount of notice (e.g. four weeks) that they will need to take annual leave.

The General Retail Industry Award 2010 provides:

32.5 Close-down

An employer may require an employee to take annual leave as part of a close-down of its operations, by giving at least four weeks’ notice.

The Food, Beverage & Tobacco Manufacturing Award 2010 provides:

34.11 Annual close-down

Notwithstanding s.88 of the Act and clause 34.6, an employer may close down an enterprise or part of it for the purpose of allowing annual leave to all or the majority of the employees in the enterprise or part concerned, provided that:

(a) the employer gives not less than four weeks’ notice of intention to do so;

(b) an employee who has accrued sufficient leave to cover the period of the close-down is allowed leave and also paid for that leave at the appropriate wage in accordance with clauses 34.4 and 34.5;

(c) an employee who has not accrued sufficient leave to cover part or all of the close-down, is allowed paid leave for the period for which they have accrued sufficient leave and given unpaid leave for the remainder of the close-down;

(d) any leave taken by an employee as a result of a close-down pursuant to clause 34.11 also counts as service by the employee with their employer;

(e) the employer may only close down the enterprise or part of it pursuant to clause 34.11 for one or two separate periods in a year;

(f) if the employer closes down the enterprise or part of it pursuant to clause 34.11 in two separate periods, one of the periods must be for a period of at least 14 consecutive days including non-working days;

(g) the employer and the majority of employees concerned may agree to the enterprise or part of it being closed down pursuant to clause 34.11 for three separate periods in a year provided that one of the periods is a period of at least 14 days including non-working days; and

(h) the employer may close down the enterprise or part of it for a period of at least 14 days including non-working days and allow the balance of any annual leave to be taken in one continuous period in accordance with a roster.

If an employee is not Shutting down over Christmas by an award or an agreement, their employer can direct them to take annual leave if the direction is reasonable. The contract of employment may also contain a provision for close down.

What if an employee doesn’t have enough annual leave to cover the shut down period?

If the award or agreement provides for it, an employer can direct an employee to take annual leave in advance of accrual, or unpaid leave for some or all of the time.

The FBT Award contains specific provisions at clause 34.11 (b) and (c).

However, under the General Retail Industry Award 2010 there is no similar provision as that in the FBT Award at 34.11(c) where an employee can be directed to take unpaid leave.

However, an employer and employee can agree that the employee takes annual leave (including in advance of accrual) or unpaid leave for the shut down time. The employee can’t be forced to take unpaid leave, so if an agreement can’t be reached with their employer, they need to be paid their ordinary pay for the time.

What happens if a public holiday falls during an employee’s annual leave?

If a public holiday falls during an employee’s annual leave, they need to be paid for the public holiday, not annual leave. This means that an employee should be paid their base pay rate for the day, it shouldn’t be taken off their annual leave balance.

Working during a shut down

If employees continue to work when a business Shutting down over Christmas, for example skeleton staff, they should be paid as normal. If any of the days are public holidays, these days are treated as public holidays, i.e. the employee should be given the day off without loss of pay or they should be paid public holiday rates as per their award or agreement.