Annual shutdown changes

13 April 2023

Following the completion of the Fair Work Commission's (FWC) four-yearly review of modern awards the FWC has handed down a decision that the Fair Work Act does not include a power for the Commission to include terms in Modern Awards by which an employer can require an employee to take unpaid leave during a period of annual shutdown.

This decision means that employers can no longer direct employees to take unpaid leave during shutdown periods from 1 May 2023.

When businesses shutdown their business, typically over the Christmas and New Year's period, employees can be directed to take annual leave, or offered leave in advance, or could be directed to take leave without pay if they do not have sufficient accrued paid leave. After 1 May 2023, taking leave without pay during a period of annual shutdown can still occur by agreement, but the ability for employers to  direct the taking of unpaid leave during an annual shutdown.

From 1 May 2023, employees are not legally required to take leave without pay if they don't have sufficient annual leave or leave in advance to cover the whole period of the shutdown.

Variations in awards

The Building and Construction General On-site Award, along with 78 other awards, will be varied as follows and take effect from 1 May 2023:

XX.XX Direction to take annual leave during shutdown

• (a) Clause XX.XX applies if an employer: 
  • (i) intends to shutdown all or part of its operation for a particular period (temporary shutdown period); and
  • (ii) wishes to require affected employees to take paid annual leave during that period.
• (b) The employer must give the affected employees 28 days’ written notice of a temporary shutdown period, or any shorter period agreed between the employer and the majority of relevant employees.
• (c) The employer must give written notice of a temporary shutdown period to any employee who is engaged after the notice is given under clause XX.XX(b) and who will be affected by that period as soon as reasonably practicable after the employee is engaged.
• (d) The employer may direct the employee to take a period of paid annual leave to which the employee has accrued an entitlement during a temporary shutdown period.
• (e) A direction by the employer under clause XX.XX(d): 
  • (i) must be in writing; and
  • (ii) must be reasonable.
• (f) The employee must take paid annual leave in accordance with a direction under clause XX.XX(d).
• (g) In respect of any part of a temporary shutdown period which is not the subject of a direction under clause XX.XX(d), an employer and an employee may agree, in writing, for the employee to take leave without pay during that part of the temporary shutdown period.
• (h) An employee may take annual leave in advance during a temporary shutdown period in accordance with an agreement under clause XX.XX.
• (i) In determining the amount of paid annual leave to which an employee has accrued an entitlement, any period of paid annual leave taken in advance by the employee, in accordance with an agreement under clause XX.XX, to which an entitlement has not been accrued, is to be taken into account.
• (j) Clauses XX.XX to XX.XX do not apply to a period of annual leave that an employee is required to take during a temporary shutdown period in accordance with clause XX.XX.

Need help?

If you'd like any advice on this issue, please contact our Workplace Relations team.