How is Your Business Operating this Holiday Season? Do you Intend to Have a Temporary Shutdown?

Employers should review their obligations and employee entitlements for working arrangements this holiday season.

Many employers routinely shut down their business or a part of their business temporarily during the holiday season (also known as the ‘close down’ period). Some employers work through the holiday season with reduced staff numbers to meet operational needs (also referred to as ‘skeleton staff’), while other employers get busier and may require employees to work more hours to meet increased demands.   

In each scenario, an employer should provide adequate notice to its employees about work arrangements to meet its operational requirements and ensure compliance with shutdown rules under any applicable modern award or enterprise agreement. 

This article covers what employers need to consider for a temporary shutdown or if operating with the use of skeleton staff. 

Shutdown Period

A shutdown period is when a business or part of a business temporarily closes for a specified period, most commonly around Christmas and New Year. As the holiday season is fast approaching, employers should ensure they provide employees with adequate notice and pay their employees correctly. 

Award or Enterprise Agreement Covered Employees

An employee can be directed to take annual leave during a shutdown if their enterprise agreement or award allows it.

In most cases, the direction to take annual leave during a shutdown must be:

  • reasonable;
  • in writing; and
  • given to affected employees within the required notice period.

Enterprise agreements may have shutdown provisions outlining rules or parameters around how much notice is required and when an employee can be directed to take leave during a shutdown.

In December 2022, the Fair Work Commission announced as part of its four-year review of modern awards, changes to the shutdown provisions in 78 modern awards effective 1 May 2023. 

Significantly, a revised ‘model clause’ has recently been included in these awards, changing the notice period requirements and prohibiting employers from directing employees to take unpaid leave during a shutdown.

The most common notice period now required is 28 days or one month. However, a limited number of awards require a greater notice period, such as two or three months. Some awards are silent on the amount of notice required. In this circumstance, reasonable notice should be provided. 

Some awards allow employers and a majority of affected employees to agree on a shorter notice period for a shutdown direction. As the holiday season approaches, it is important that employers understand their obligations to avoid breaching workplace instruments. 

A complete list of the amended awards can be found on the Fair Work Commission’s website

Award or Enterprise Agreement-Free Employees

For employees not covered by a modern award or enterprise agreement, the provisions relating to directions to take annual leave in the Fair Work Act 2009 (Cth) (Act) apply.

Section 94(5) of the Act provides that an employer can require an employee to take paid annual leave, but only if the requirement is ‘reasonable’.  

Provided the award or enterprise-free employee is given a ‘reasonable’ period of notice, and the employee has sufficient annual leave to cover the shutdown, the requirement to take annual leave is likely reasonable.

Where an employee has insufficient annual leave to cover the shutdown and the employee does not agree to take unpaid leave, an employer may need to consider possible options, including:

  • paid annual leave in advance;
  • other leave, such as unused time off in lieu or long service leave;
  • requiring the employee to work during the shutdown as part of a skeleton staff; or
  • paying the employee while absent from work.

Skeleton Staff Working During a Shutdown

If the business intends to operate with skeleton staff during a shutdown, make ensure you identify the essential roles, the likely volume of work during the shutdown period, and who in the team has the skills level to manage the work or operations.  

Planning skeleton staff requirements is important to avoid over-stretching team members in their roles or expecting team members to perform work outside their level of skill and expertise. Balancing the skeleton staff roster can be challenging. 

Some tips when considering your skeleton staff roster include: 

  • identify if the proposed skeleton staff can perform the responsibilities required;
  • Identify if there are any appropriate development opportunities for employees, such as acting manager roles; 
  • Create a temporary escalation plan during the shutdown, such as using on-call managers;
  • Create a backup plan, such as an on-call list of workers or temporary changes to operating timeframes to set client expectations during the shutdown. 

Once the proposed skeleton staff roster is mapped out, it is vital to consult with your employees as early as possible on their availability to work during the shutdown. Creating a roster should be thought through with sensitivity and fairness between employees, and in compliance with the employer’s work health and safety duties. The usual rules about public holidays continue to apply.

Tips to Prepare for a Shutdown 

  • check the enterprise agreements and awards that apply to your business to find out what rules apply;
  • implement, review, or amend your leave policies to ensure the proposed shutdown complies with the relevant workplace instruments;
  • implement, review, and amend the shutdown operational plan to manage workload and any resource shortfalls;
  • consider whether skeleton staff are necessary; 
  • communicate and consult with employees about the shutdown, including providing the required written notice (or a longer period of notice where feasible);
  • check employees’ leave balances to ensure employees have sufficient leave for the shutdown;
  • recruit any required temporary employees for the shutdown;
  • manage employee leave, which may include unpaid leave or an agreement for annual leave to be paid in advance of its accrual;
  • plan payroll to ensure employees working during the shutdown period are correctly paid any applicable penalties; and
  • inform your other stakeholders, such as clients, suppliers, and contractors, about your shutdown and any operational adjustments.

If you need assistance planning your business shutdown and ensuring compliance with your legal obligations, contact WilliamsonBarwick

We are here to help! 

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