Holiday Period Shutdown Guide

It is coming to that time of year again where Christmas is around the corner and the New Year follows shortly thereafter. Are you shutting down for the break? Know the rules.

What is a Shutdown?

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.

Understand your Award

Whilst your Bookkeeper is already across the relevant awards for the employees, it is helpful for you 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 on 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.

Shutdown Payments

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.

When nothing is stated in the Award or the Agreement, then the employee cannot be forced to use their leave or be forced to take unpaid leave. Typically, you can negotiate a favourable arrangement for both parties, such as partial paid and unpaid leave. It is imperative that all terms and conditions relating to the employee’s contract are adhered to during the shutdown.

Refer to the relevant award or agreement in the event that there is not enough leave accrued to cover the shutdown period. Some awards state that the employee will receive unpaid leave during the period, whereas others can take paid leave in advance. If the employee does not agree to take unpaid leave or leave in advance, the employee is entitled to be paid their usual wages.

Public Holidays

When public holidays fall during an employee’s leave, these are to be treated as public holidays and not as annual leave – it is treated as though they would have worked that day should they not have been on leave. The public holiday pay should not affect their leave accrual and be paid as another working day. The employee will be paid for any public holidays during the shutdown period that fall on days they would normally work.

An example of what can occur:

Mary is a full-time employee who has requested leave for the duration of 7 days. This includes Anzac Day, a public holiday that falls on a Monday. Because Mary is a full-time employee, she would need to be paid for Anzac Day. This means that Mary is only taking 6 days of annual leave, not 7.

When employees take sick leave on either side of a public holiday, they are still entitled to be paid for the public holiday as though they would have been at work that day. The usual sick leave process applies unless there is any evidence that demonstrates otherwise.

An exception would be when the employee has been rostered to work on a public holiday, which is not a day they would usually work. If they were to call in sick, the employee would not be paid for that day. Additionally, no payment will be made for the public holiday if the employee is on unpaid leave.

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.

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.
• Loadings.
• Overtime.
• 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.

An example of this would be:

Steven is a part-time employee who works from Tuesdays to Thursdays. This year Anzac Day fell on a Monday. Because Steven does not typically work on Mondays, he will not be paid for this holiday.

Housekeeping

• 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.