Employers often direct employees with insufficient accrued annual leave to instead take unpaid leave during temporary shutdown periods, such as over the Christmas holiday period.
However, from 1 May 2023 this option will not be available for many award-covered employers.
Where did this come from?
On 22 December 2022, as part of its plain language four yearly review, the Fair Work Commission (Commission) determined to include a new annual shut down model provision in 77 modern awards. These awards include:
- Hospitality Industry (General) Award 2020;
- Building and Construction General On-site Award 2020;
- Clerks—Private Sector Award 2020;
- Higher Education Industry—General Staff—Award 2020; and
- Manufacturing and Associated Industries and Occupations Award 2020.
The list of affected modern awards can be found at Attachment A of the Commission’s 25 August 2022 decision here.
Importantly, the Full Bench considered varying the black coal award, however, decided to not make any changes, which means that employees covered by the Black Coal Mining Industry Award 2020 retain the right to take annual leave without pay even if they have accrued annual leave.
Employees can say no to unpaid leave!
The new provisions entitle employees with insufficient accrued annual leave to refuse to take unpaid leave over Christmas shutdown periods.
Instead, those employees may be entitled to continue to work during shutdown or, if there are no suitable duties, be paid additional annual leave while not working.
Employers must comply with notice periods
Employers must satisfy new notice requirements.
Written notice of a temporary shutdown period must be given to employees 28 days before it starts. Some awards may have a longer notice period. Employers and the majority of employees can agree to a lesser notice period.
If an employee starts work after the notice is provided, then the relevant employee must be given notice of the temporary shutdown period as soon as reasonably practicable after starting. For example, notice could be given in a contract of employment.
What does your organisation need to do
Employers may consider these steps:
- plan tentative dates for proposed shutdowns for the 2023/24 Christmas period so you know exactly how much annual leave must be accrued (don’t forget to factor in gazetted public holidays and pro-rata requirements for part-time employees);
- add a rule to HR/ leave systems so annual leave requests cannot be approved if an employee will not have enough annual leave for the temporary shutdown period or has not agreed to otherwise take unpaid leave, rostered days off, time off in lieu or annual leave in advance of accrual;
- update leave policies and contractual documents to reflect these changes.
It is likely an employer may lawfully refuse an annual leave request of an employee if the primary purpose of that refusal is to ensure the employee has enough accrued annual leave to facilitate the direction to take annual leave during a temporary shutdown period.
In limited circumstances, an employer may be able to rely on the stand down provisions in s 524 of the Fair Work Act 2009 (Cth). For example, if a head contractor closes down a site for a period that may give rise to a stoppage of work for which a subcontractor employer cannot reasonably be held responsible and thus enable a stand down under s 524.
As always, Kingston Reid is well placed to ensure that your organisation is ready for this change. Please reach out and we would be delighted to assist you.