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Shutting down over the holidays?

With Christmas just around the corner, many businesses are starting to plan for the holiday period.

Planning to shut down over the break? Here's some information you'll find handy.

Do I have to pay my employees during the shut down?

Full-time and part-time employees have to be paid their usual wages unless they are covered by a Modern Award or Enterprise Agreement which provides otherwise.

You should accordingly check any applicable Modern Awards and Enterprise Agreements very carefully, and ensure you meet all your obligations.

Casual employees are not entitled to payment during annual shut-downs.

Can I tell my employees to take their annual leave when we shut down?

This depends on whether the employees are covered by a Modern Award or Enterprise Agreement or are, instead, Award/Agreement-free.

If a Modern Award or Enterprise Agreement applies - and if it expressly allows you to direct employees to take annual leave during the shut-down - you can do so.

Make sure you also carefully follow all the associated rules which will be set out in the Modern Award or Enterprise Agreement.

If your employees are covered by a Modern Award or Enterprise Agreement which doesn't say anything about shut downs or directing employees to take annual leave, you can't force employees to use their annual leave during your shut-down.

If your employees aren't covered by either a Modern Award or Enterprise Agreement, you can only direct them to take annual leave if your direction is 'reasonable' in the circumstances.

In this case you'll also need to ensure you comply with any terms in the employee's contract which cover annual shut-downs.

What if an employee doesn't have enough annual leave to cover the shut down period?

This is quite a common situation, and must be carefully managed in accordance with any applicable Modern Award or Enterprise Agreement. Some Modern Awards and Enterprise Agreements require employers to provide unpaid leave to those employees who don't have enough accrued annual leave to cover the full period.

In contrast, some Modern Awards or Enterprise Agreements require employees to be given paid annual leave in advance of its accrual to cover the entire duration of the shut-down.

If the applicable Modern Award or Enterprise Agreement doesn't have specific rules to cover this situation, you can ask your employee to take:

- unpaid leave, or
- annual leave in advance of it being accrued (as long as the award or agreement doesn't prohibit this).

However, if your employee doesn't agree to take unpaid leave or annual leave in advance of its accrual, you'll then need to pay them their ordinary wage or salary during the shutdown. This can of course, be exceptionally expensive, particularly if the business has no income while it's closed.

What happens if a public holiday falls during an employee's annual leave?

Public holidays 'override' annual leave.

This means that the employee must be paid their base rate of pay for the day in question, and that day is not deducted from their accrued annual leave balance.

Need help?

Ask the team of HR experts at Workforce Guardian by using the HR Advice Online Service or HR Advice Hotline Service.