Shutdown Periods: A Guide for Australian Businesses
Navigating the Recent Changes to Shutdown Periods: A Guide for Australian Businesses
Late last year, the Fair Work Commission issued a decision concerning shutdowns which took effect in May this year, ushering in changes to shutdown periods that will have a significant impact on numerous businesses throughout Australia.
Although these changes have been in place since the first half of the year, many organisations will only now be thinking about implementing their shutdowns or closures for the Christmas/New Year period. Therefore, it is important to come to grips with these changes now and take action to ensure you are complaint with the new obligations.
So, what exactly are these changes? A new “model clause” has been incorporated into most modern awards, which now prohibits employers from mandating unpaid leave for employees during a temporary shutdown, such as over the Christmas and New Year period. In cases where an award-covered employee lacks sufficient annual leave to cover the temporary shutdown period, the employer is obliged to pay the employee during that period if they do not require the employee to work.
Additionally, the new clause mandates that employers provide written notice of the impending shutdown to all affected award-covered employees. The notification period, as stipulated, is typically 28 days or one month, but some awards specify longer notice periods, extending to two or three months, for example:
- Building & Construction General On-site Award 2020: two months
- Meat Industry Award 2020: three months
- Miscellaneous Award 2020: one month
So, as an employer, what can you and cannot do now? Here’s a summary:
- You must provide written notice of the temporary shutdown period (the notice period varies depending on the award, often 4 weeks or 28 days).
- You can direct an employee with sufficient annual leave to take annual leave during a temporary shutdown period.
- You can receive written agreement from an employee to take annual leave in advance during a temporary shutdown period, where the award permits this. Be aware that some awards allow deductions from the final pay if the employee still has a negative leave balance when their employment ends, but employees are not obligated to agree to taking leave in advance.
- You can obtain written agreement from an employee to take unpaid leave during a temporary shutdown period. However, employees are not obligated to agree to this.
- You cannot direct an employee with insufficient leave to cover a temporary shutdown period to take leave in advance or unpaid leave.
To ensure your business remains compliant, follow these steps:
- Determine if your business needs to temporarily shut down during the Christmas period.
- If so, confirm the shutdown period dates.
- Review the relevant Modern Awards that apply to your business and take note of the required written notice period.
- Inform affected employees of the temporary shutdown period, ensuring compliance with the written notice provisions in the applicable awards.
- Monitor your employees’ annual leave accruals, especially leading up to the temporary shutdown.
- If you are directing employees to take annual leave, communicate this separately.
- Ensure you have written agreements in place for employees who agree to take leave in advance or leave without pay.
- Familiarise yourself with the Fair Work Act provisions regarding the refusal of annual leave.
It is important for businesses to stay informed about the new rules about shutdown periods. It is essential for businesses to identify the applicable Modern Awards and seek expert guidance when uncertain about compliance requirements.
If you need assistance understanding your obligations concerning shutdown periods, our team is ready to assist.