Annual Leave Shutdown Provisions

Taryn Heinrich

Somehow, we have arrived at the mid-way point for the year and as ridiculous as it seems, we are already starting to look towards the end of 2023 and the start of 2024!

As we look at the next six months, conversations and planning for the Christmas/New Year period are becoming a consideration for employers and employees.

What felt like we had an extensive amount of time to plan for the lead up to Christmas, all of a sudden, we find ourselves having to look forward, and employees need to start considering what their leave is going to look like in the next 6 months.

As an employer, it is crucial to be aware of recent changes to the Fair Work Act regarding annual leave shutdown provisions. If your business annually closes during the Christmas/Summer period, you must take immediate action to ensure compliance with these changes and effectively communicate them to your employees.

What are the changes?

  • The most significant change is that the variation has removed the ability for an employer to direct an employee to take a period of unpaid leave if that employee does not have a sufficient annual leave balance to cover a shutdown period. With the removal of the option to direct unpaid leave, employers may need to reconsider how they approve or decline annual leave requests throughout the year. It’s important to ensure that employees have sufficient annual leave accrued to cover their requested leave periods.
  • During the shutdown period, employers may need to provide alternative work arrangements for employees who do not have sufficient annual leave. This could involve offering other forms of paid leave (if available), such as long service leave or any other paid leave entitlements, or exploring the possibility of temporary transfers within the organisation.
  • You must provide no less than 28 days (4 weeks) notice of your intention to shut down. Please note this timeframe may not be standard across all awards. For example, the Building and Construction General On-site Award 2020 requires 2 months’ notice of your intention to shut down.

Below are some steps you should consider taking to ensure you and your employees are well prepared for the changes and planning required coming into the second half of the year.

  • Review the Updated Modern Awards: Firstly, ensure you thoroughly review the updated modern awards to understand the specific changes made to the annual leave shutdown provisions. These changes may impact the way you handle annual leave during the closure period.
  • Update Employment Contracts: Update your employment contracts to reflect the new rules, ensuring your employees are on the same page regarding annual leave entitlements and shutdown provisions.
  • Communicate with employees: Inform your employees about the changes and provide them with clear and concise information about how the new provisions will affect their annual leave entitlements over the Christmas/New Year closure. Inform them of the planned dates for the closure within the required timeframes.
  • Update Leave Policy: Ensure that your leave policy is well-defined and communicated to all employees. Clarify the process for requesting time off including any deadlines for submitting leave requests.
  • Leave Balances: Encourage employees to check their leave balances now and plan accordingly. Some employees may have accumulated a significant amount of leave that they need to use before the end of the year, while others may need to manage their leave more carefully to ensure they have enough to cover the Christmas/New Year period.
  • Fair and Equitable: Be fair and equitable when considering leave requests. If multiple employees request leave during the same period, make sure to handle it transparently and follow a consistent process in approving requests.
  • Encourage Rest and Wellbeing: Remind employees of the importance of taking regular breaks and maintaining a healthy work-life balance throughout the year. Encourage them to take time off when they need it, even if it’s not during the Christmas/New Year period.

By proactively planning over the next six months, both employers and employees can look forward to a well deserved break during the Christmas/New Year period and return to work with renewed energy and enthusiasm.

If you are unsure about how the changes may impact your business or how to implement them effectively, contact our HR team on 03 5331 1734 for more information.

About The Author
Taryn Heinrich

Taryn’s passion is working with businesses and individuals to bring out their best. Taryn developed her HR generalist skills working on investigations, strategic planning, employment contracts, and developing and implementing HR policies and procedures.

Working closely with your business and employees, Taryn has a distinctive talent for setting people up with the tools they need to do their job safely and helping your business operate successfully. If you need help with anything HR related, Taryn is your go-to person!

On the weekend, you’ll find Taryn spending time with her family and friends – she’s always the first to arrive and the last to leave.

For more useful information, follow Taryn on LinkedIn.

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