Understanding your obligations
An employer’s authority to direct employees to take annual leave during a temporary shutdown will depend on the relevant provisions in the applicable modern award, enterprise agreement, or for employees without an award or agreement, the National Employment Standards.
If you, like many employers, plan to temporarily close your operations over the Christmas and New Year period, it’s important to understand your ability to direct employees to take annual leave or, in some cases, unpaid leave during this time.
Prior to directing employees to take a period of annual leave at any time, there is a requirement to confirm that:
- There is an entitlement to direct an employee to take leave under any applicable industrial instrument, and if so,
- Any requirement to provide a minimum period of notice of the requirement to take leave is adhered to.
- Employees are provided with the relevant notice of a temporary shutdown, and;
- That the requirement to take annual leave is reasonable.
Award Covered Employees
While many modern awards will provide an employer with the right to require employees to take a period of annual leave during an annual shutdown, it is essential that the terms in each of the applicable modern award/s or agreements which apply in your workplace be carefully reviewed to ensure that this is permitted.
Where such a shutdown is permitted under the applicable industrial instrument, but an employee has insufficient annual leave accrued, the award will determine how the period of leave is to be processed during a shutdown.
Where insufficient leave is accrued, some awards will permit for an employee to take:
- A period of annual leave in advance
- A period of unpaid leave
If your award or agreement does not address shutdowns or the requirement to direct employees to take annual leave, you cannot force employees to use their accrued leave. While you can request or negotiate with employees to take either paid or unpaid leave, they are not obligated to agree. If they choose not to, they are entitled to continue receiving their regular payment during the period.
As the employer, you may offer employees the option of unpaid leave, but you cannot direct employees to take it.
