Published May 2023

New Shutdown Rules for Awards

WHAT IS CHANGING?

From 1 May 2023, many awards will have updated rules on taking annual leave during a shutdown. A shutdown is when a business temporarily closes, such as during the Christmas / New Year or planned maintenance.

An employee can be directed to take annual leave during a shutdown if their award, registered agreement, or contract allows it. The new rules mean:

• 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 for other options for the days not covered, such as:

• • using accrued time off;
  • annual leave in advance, or
  • leave without pay.

The employee will be paid for any public holidays during the shutdown period that fall on days they would normally work.

WHO THE CHANGES APPLY TO?

These new rules apply to employees and employers covered by one of the affected awards listed below. Fair Work has updated their information on directions to take annual leave during a shutdown. This includes for common awards and industries like:

• Building and Construction;
• Manufacturing and Associated industries;
• Clerks and Private sector;
• Plumbing and Fire Sprinklers;
• Road Transport and Distribution;
• Hair and beauty;
• Hospitality (including fast food and restaurants);
• Professional Employees;
• Nurses;
• Real estate.

All the remaining awards are changing also. I would encourage you to check your applicable award to confirm changes and their applicable effective dates.

WHAT DOES IT MEAN TO YOUR BUSINESS?

• Notice of shutdown must be in writing and reasonable.
• Employers should ensure they provide employee with a written agreement if the employer and employee agree to take any leave in advance.
• The employer must keep a copy of the agreement as an employee record.  
• Employers must understand that they may need to agree for employees to take annual leave in advance (of it accruing) in cases where the employee does not have enough leave to cover the shut down period or does not agree to take unpaid leave.

WHAT ABOUT ENTERPRISE AGREEMENTS?

The new Shutdown rules only apply to updated awards, however it may apply to Enterprise Agreements that work in conjunction with awards. Please reach out if you have any further questions or require advice whether these provisions apply to your employees and business.

WHERE CAN I GET HELP?

Compliance is a significant area of focus for the Fair Work Commission so it’s important you get it right. Please reach out if you require any further advice, templates and/or a tailored HR service for your business.