Christmas is approaching - is it time to give notice?

Do you intend to shut down operations over the Christmas and New Year period this year?

If so, now is the time to start thinking about likely shut down dates and double checking your obligations in relation to employee entitlements during the shutdown.

Unfortunately, many employers mistakenly believe that:

  1. they can simply direct an employee to take annual leave during a period of shut down; and
  2. if the employee has insufficient annual leave accrued to cover the shutdown, the employee can be directed to take unpaid leave.

This is not always the case.

The rules and requirements regarding periods of shutdown differ depending on the modern award or enterprise agreement that covers the particular employee.

Whilst some instruments contain provisions regarding annual shutdowns, this is not universally the case – and in situations where an award/agreement does not expressly provide an ability for an employer to direct an employee to take leave during a shutdown, in most cases the employer will not be able to do this.

In addition, where an employer is permitted to direct employees to take annual leave during a shutdown:

  • in most cases written notice is required (typically between four weeks' and two months’ notice);
  • in some cases, employees can’t be compelled to take leave if they do not have sufficient leave accrued (in which case the employer would have to pay the employee during the shutdown);
  • a period of unpaid leave during a shutdown counts as service under some instruments (and therefore personal and annual leave will accrue during the period); and
  • full and part time employees are still entitled to be paid for public holidays that fall within any period of shutdown / leave.

For employees that aren’t covered by an enterprise agreement or a modern award, you can only direct the employee to take leave if the direction is reasonable in the circumstances. Relevant considerations  include:

  • the needs of the employee and the business;
  • the period of notice given;
  • whether or not the employee has sufficient leave accrued (or is otherwise to be granted leave in advance);
  • whether the employee’s contract of employment (or a company policy) indicates that the business usually shuts down over Christmas; and
  • the duration of the shutdown.

The long and the short of it is, the situation regarding shut downs is sometimes a little complicated.

Employers should take steps NOW to:

  1. check their industrial instruments and confirm their ability to direct employees to take leave;
  2. (where a direction is permissible) start preparing written notices and diarise when they need to be provided by; and
  3. seek advice if they are unsure about their obligations.

Kristin Ramsey is a Director at Hynes Legal and heads up the firm's Employment and Workplace Relations team. She predominately acts for medium sized businesses in the hospitality, retail, health, fitness, franchising, engineering and aged care industries.  

Views: 2383

Comment by Benjamin Hume Walker on October 15, 2016 at 9:20

Congrats Kristin;  a well written article giving succinct guidance on this sometime complex topic

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