With this year's festive season fast approaching, it is important to ensure compliance with annual leave provisions in relevant Modern Awards and/or Enterprise Agreements if your business is planning to shut-down over the traditionally quiet Christmas/New Year period.
Many Modern Awards and Enterprise Agreements contain strict notice and procedural provisions that employers must comply with if they wish to require an employee to take paid annual leave:
- during a period of shut-down; or
- if the employee has an excessive accumulated annual leave balance, for example, eight weeks annual leave.
Notice of shut-down
An employer must provide its employees with notice of its intention to shut-down and the requirement that they take annual leave for the period. Employers can be penalised for failing to comply with this procedural requirement and may be fined up to A$33,000 per breach.
Employees covered by the following Modern Awards must be given at least four week's notice of an annual shutdown:
- Banking, Finance and Insurance Award 2010
- Clerks – Private Sector Award 2010
- Commercial Sales Award 2010
- Hospitality Industry (General) Award 2010.
The Black Coal Mining Industry Award 2010 requires that employees be provided with at least 28 days' notice.
Employers should check the provisions of the specific Modern Award(s) that apply to their business as the notice periods differ.
In order to comply with the above notice provisions, employers will need to make preparations to provide employees with notice in early/mid November 2011, depending on the timing of the annual shut-down.
What about Award-free employees?
Employers also need to provide Award-free employees with notice of an annual shut-down if they are required to take annual leave for the period. While there are no specific notice provisions for Award-free employees, the direction to take annual leave must be reasonable, having regard to:
- the reasonableness of the period of notice given to take the leave
- the needs of both the employee and the employer's business
- any agreed arrangement with the employee
- the custom and practice in the business.
Notice in writing to employees
To evidence compliance with the Fair Work Act, employers are advised to provide employees with written notice of the shutdown period and the requirement for employees to take paid annual leave. Written notice can be provided through:
- a broadcast email to employees; and/or
- a notice to employees with their payslip.
A timely opportunity to manage annual leave accruals
Employers may also wish to use the pending festive season as an opportunity to manage excessive leave accruals within the business.
Employees who have excessive annual leave accruals can be directed to take annual leave in accordance with any procedural and notification provisions in applicable Modern Awards and Enterprise Agreements. Award-free employees can similarly be directed to take excessive accrued annual leave, provided the direction is reasonable in the circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
