Australia: Christmas: 'tis the season (for employers and employees) to be jolly cautious!

Last Updated: 28 November 2012
Article by David Thompson and Sarah Sealy

With the festive season upon us, now is the time for employers to communicate those important messages to their employees about Christmas parties, office closures and Christmas bonuses.

Here are some of our tips and things that should be considered.


An office Christmas party can be quite the celebration, however staff may not be the only ones left with headaches if the event does not run smoothly.

The rules that apply in the workplace generally also apply to work functions, including Christmas parties, even if the function takes place outside work hours and away from the office.

This means that policies relating to (for example) discrimination, sexual harassment and work health and safety still apply, because of the connection between the workplace and the event.

Injuries suffered at the Christmas party can be the subject of a workers' compensation claim against the employer. Obligations to prevent sexual harassment or bullying also apply at the Christmas party, and responsible service of alcohol must be taken into account when managing these risks.

Employers can take the following steps to protect themselves and ensure the function is safe and enjoyable for all:

  1. ensure employees are made aware that the Christmas party is a work event and that responsible behaviour and respectful attitudes are required and will allow everyone to end the year on a high note;
  2. ensure relevant workplace policies are up to date and easily accessible. Remind employees (prior to the event) that these policies continue to apply at work events;
  3. remind employees of their obligations, and that failure to observe the employer's policies at all times during the event may be used by the employer as a basis for disciplinary action, or in certain circumstances, termination of employment;
  4. provide employees with information regarding available transport options, to ensure they arrive to and depart from the event safely; and
  5. provide employees with the details of a responsible contact person at the event, in circumstances that they need assistance or have any concerns.


An employer can temporarily shut down their workplace during traditionally slow business periods, such as between Christmas and New Year.

The terms of an industrial instrument (i.e. a modern award or enterprise agreement) may allow an employer to require an employee to take paid annual leave during such a period. However, the requirement must be reasonable.

Many industrial instruments impose strict notice and procedural requirements on employers if they wish to direct employees to take paid annual leave, or unpaid leave, during an end-of-year shutdown.

If an employer intends to close their business for any period of time, the Fair Work Act 2009 (Cth) (Act) specifies that the requirement to take annual leave must be reasonable. This means that, amongst other things, appropriate advance notice must be given. Most modern awards, such as the Clerks - Private Sector Award 2010 and the Banking, Finance and Insurance Award 2010 require four weeks' notice.

Employers should be sure of the basis on which an end-of-year shutdown is notified and implemented, by checking the provisions of industrial instruments that apply to their staff - notice periods can vary.

The Act allows an employer to require more senior employees who are not covered by an industrial instrument, to take paid annual leave. No minimum notice period for this requirement applies unless one has already been agreed with the individual senior staff member. The Act does restrict a requirement for award-free employee to take paid annual leave to requirements that are "reasonable".

In determining whether a requirement to take annual leave is reasonable, keep in mind the following factors:

  • the needs of both the employee and the employer's business;
  • any agreed arrangement with the employee;
  • the custom and practice of the business;
  • the timing of the requirement or direction to take leave; and
  • the reasonableness of the period of notice given to the employee to take leave.

In all cases, notice of a shutdown should be provided in writing, which can include notice via email.

Careful consideration also needs to be given to what should occur where an employee has insufficient accrued annual leave. An employer may allow an employee to take annual leave in advance, take unpaid leave or a combination. These choices will need to be discussed with and agreed with applicable employees.


Many bonus payments are tied closely to performance. Often, if agreed targets are met under a defined performance bonus formula, the bonus must be paid. However, an annual "Christmas bonus" (if paid by employers at all) might be discretionary or dependent on business performance meeting particular hurdles.

It is important to deal early and sensitively with employee expectations of bonus payments. Managing expectations early and in a straightforward and unembellished way will be an important step in successfully concluding the year.

If there is an expectation that a bonus will be paid, an employer should determine whether the payment (or a reduced payment) is required or discretionary. A discretionary bonus can be refused, but it will be important that the decision is able to be explained to employees consistently with the business' objectives and performance, and not be seen as being a capricious or arbitrary (or "scrooge"-like) decision.

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.

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