Employers can no longer direct employees to take unpaid leave during shutdowns
Shutdown periods are a common business practice during calendar holiday periods such as over the Christmas and New Year period. A shutdown period refers to a particular period when a business is temporarily closed.
Employees with an entitlement to annual leave are often directed to take annual leave during these periods. As such, employees will often accrue and keep their annual leave balance, in forethought of ensuring their balance will cover them during the shutdown period. However, where an employee has an insufficient balance of annual leave hours to cover this period, they often find themselves in a predicament. In this instance, the leave policy of many employers will require the employees to take unpaid leave.
As of 1 May 2023, employers are prohibited from directing employees covered by any of the 78 impacted modern awards to take unpaid leave during any business shutdown periods.
This change follows the 22 December 2022 decision of the full bench of the Fair Work Commission to amend 78 of the modern awards by implementing a clause which protects employees from being forced to take unpaid leave during shutdown periods. These amendments are now in operation. Some of the impacted awards impacted include:
The changes also impose an obligation of employers (in all 78 impacted modern awards) to provide their employees with a minimum of 28 days’ notice in writing, notifying employees of the dates and details of the temporary shutdown period.
Employers of employees covered by any of the 78 impacted modern awards need to be aware that they are now prohibited from directing employees to take unpaid leave during a shutdown period. Employees equally should be aware of their entitlements regarding leave during their workplace shutdown period.
As the Christmas and New Year period approaches, employers must be aware of their obligations in the following circumstances.
The changes significantly impact the management of employee leave during shutdown periods. Navigating these changes can be complex for many employers and ensuring that your business is protected can be difficult. Now is a crucial time to review any existing employment contracts, leave policies, or procedures to ensure compliance with the new provisions and protection of your business from potential liability.
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