New Fair Work Rules for Christmas Shutdowns
With the holiday season almost upon us, now is the time for employers to ensure they are complying with the new rules that were introduced this year around Christmas shutdowns.
According to the Fair Work Ombudsman, a ‘shutdown’ or ‘close down’ is when a business temporarily closes during a specific period. The reasons may be that it is not viable for the business to operate during this period because it may be a quiet time, or many staff are away on leave.
Whilst your Bookkeeper should already be across the relevant awards for the employees, Business Owners need to understand the specific conditions that apply to a shutdown, such as during the Christmas break. The conditions can vary for each award, industry, and state. This will impact leave entitlements and other contributing factors.
Should the employees be covered by a registered agreement, then check the terms that relate to a shutdown and/or the Christmas break. To find a registered agreement, go to the Fair Work Ombudsman website.
Many awards were updated in May 2023 regarding rules on taking annual leave during a shutdown. To find out if/how you are affected you can find out HERE
The new rules outlined the following:
- Employers may require employees to take paid annual leave during a temporary shutdown.
- Employers must provide at least 28 days written notice of the temporary shutdown period to all impacted employees.
- The requirement to take annual leave must be reasonable.
- The notice period can be reduced through an agreement between the employer and the majority of impacted employees.
An employee who doesn’t have enough paid annual leave to cover the whole period can form an agreement with their employer in writing for other options for the days not covered, such as:
- Using accrued time off.
- Annual leave in advance.
- Leave without pay.
All full-time and part-time employees must be paid during this period. It is to be treated as leave. Casuals are not paid during this time, given that no work is undertaken. Depending on the type of Award or Agreement, it may or may not outline if an employee can be advised that they “must take leave” during the shutdown. The Award might indicate that the employer may request the employee take leave.
If Working on Public Holidays
All employees receive their base pay for hours worked on a public holiday. The varying entitlements are included in the Awards or Agreements for every employee, including how public holidays will impact the employee’s pay.
Some of the entitlements that need to be considered:
- Additional pay, i.e. public holiday penalty rates.
- Extra day off or annual leave.
- Minimum shift lengths on public holidays (e.g. 4 hours).
- Any agreements made to substitute another day for the public holiday.
Employees cannot be forced to work on a public holiday. However, an employer can make this request if it is reasonable to the type of employment. Equally, the employee may refuse to do so when the refusal is based on reasonable grounds.
To understand what is deemed ‘reasonable’:
- Circumstances for the employee which are personal, e.g. family responsibilities.
- The amount of pay and whether there is any increase, e.g. penalty rates.
- The type of work undertaken as well as the needs of the business.
- Whether the employee’s agreement entails working on public holidays.
- The employment status of the employee – full-time, part-time, casual or shift worker.
- The amount of notice provided to either party.
The collective circumstances of the employee need to be considered prior to requesting they work on a public holiday.
If Not Working on Public Holidays
With the exception of casual employees, employees who would normally work on the specific day that the public holiday has occurred are to be paid their usual base rate in conjunction with their ordinary hours that they would have worked.
The base rate does not include:
- Penalty rates.
- Monetary allowances.
- Bonuses or any incentive-based payments.
Please note that it is unacceptable to change an employee’s day of work to avoid making this payment.
Our Top Employer Considerations for this Holiday Season
- Familiarise yourself with the new rules around Shutdowns
- Notify all employees of your intention as a Business Owner to shutdown, and the planned shutdown dates (minimum 4 weeks’ notice).
- Ensure appropriate forms and information are received from the employees to confirm days on leave, and the confirmed intention of each employee.
- Request that your Bookkeeper calculate days each employee will not be present at work and is entitled to leave.
- Note how many public holidays there are during the shutdown period.
- Be across any employees working during the shutdown period or on a public holiday, including any relevant penalty rates or changes to the rate of pay for any employee.
- Confirm if leave is to be paid during a normal pay cycle, before Christmas, or when the shutdown is to occur.
- Is there a pay run during the shutdown, and if so, what are the implications (if any)?
Give your Bookkeeper enough time to prepare the pay run, as often, in preparation for an annual shutdown, processing the pay run will take longer than usual.