Business Holiday Closures
How do employers decide when to shut down over the Christmas/New Year holidays?
Shut downs are when a business closes for a specific period of time, and all staff take some leave over that period. Many employers put their business into a temporary shut down over traditionally slow business periods, such as between Christmas and New Year.
How can an employer do this?
Employers need to check that there is a term in their relevant modern award, enterprise agreement or other industrial agreement that allows them to require employees to take paid annual leave during a shutdown period. An employer may also require an employee not covered by an award or agreement to take a period of paid annual leave.
In both cases the requirement has to be reasonable.
What’s considered a ‘reasonable requirement’ to take annual leave?
The following factors are relevant when determining if a requirement from an employer
- to take leave is ‘reasonable’:
- the needs of both the employee and the employer’s business
- any agreed arrangement with the employee
- the custom and practice in the business
- the timing of the requirement or direction to take leave
- the reasonableness of the period of notice given to the employee to take leave.
While each employer needs to look carefully at their own circumstances, it is likely that a requirement to take annual leave during a shut down over Christmas and New Year will be reasonable.
What if an employee doesn’t have enough annual leave to cover the shutdown?
This can sometimes happen if someone has just started with the business and hasn’t had time to accrue all the annual leave necessary. For instance, a person who started on December 10 will not have accrued a week’s annual leave by 24 December.
There are a few possible outcomes:
1. The employer can credit the employee with annual leave in advance. The employee could then be required to take that advanced leave during the shut down. This is subject to the reasonableness factors set out above
2. The employee could agree to take unpaid leave
3. If the employer decides not to advance annual leave, and the employee doesn’t agree to take unpaid leave, we consider that the employee is entitled to be paid during this period. This pay must be in accord with the terms of their award, enterprise agreement and their contract of employment.
What should employers do?
By now, most employers will have determined what their hours will be over the holiday period and communicated this to their staff and customers. If you are unsure about what the requirements are for your business in terms of remuneration of staff over this period, check your relevant award(s), contracts, etc or contact Fair Work Australia.
Also, this is a good chance to show some good cheer and thank staff for a job well done and your customers for their patronage. But most importantly, have a break and reflect on your life, where you are, where you want to be and anything you need to change. Enjoy a break with family/friends and be grateful for what you have.
Merry Christmas and Happy New Year everyone – we will be closed from 24 December and reopen 6 January.Blog