Major changes in annual leave rules amid temporary shutdowns to take effect from May 2023

Starting from 1 May 2023, many Australian workers will encounter significant changes regarding annual leave during a temporary shutdown. The Fair Work Commission has detailed new rules applicable during such shutdowns, when businesses temporarily cease operations, such as during the holiday season.

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The critical changes comprise the following:

• Employers can now mandate employees to take paid annual leave during a temporary shutdown.
• Employers must provide at least a 28-day written notice of the shutdown period to all affected employees.
• Any requirement to take annual leave during this period must be considered reasonable.
• The notice period can be shortened if an agreement exists between the employer and the majority of the affected employees.
• An employee without sufficient paid annual leave to cover the entire shutdown period can negotiate alternative options for the uncovered days, such as:

• Using accrued time off,
• Taking annual leave in advance, or
• Opting for leave without pay.

• Employees will be compensated for any public holidays that occur during the shutdown on days they would typically work.

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Example:

In the case of Sally, who runs a cleaning business with 3 staff, under the Cleaning Services Award. Sally wishes for her employees to use their paid annual leave during a shutdown. However, after providing critical communication and management, Sally has reached an agreement with her staff, She will provide a 14 day notice period instead of the standard 28 days.

Another example comes from the Restaurant Industry Award. Bob, an employee at a restaurant, has been instructed by his employer, with 7 days' notice, Joe's Pizza & Pasta, that the restaurant will be temporarily closed for kitchen renovations for five days. Joe's Pizza & Pasta has also given Bob written notice that he must utilise his paid annual leave during the shutdown. If you are concerned about good governance practices on notice periods, we can provide support through our compliance packages.

These changes emphasise the importance of mutual understanding and negotiation between employers and employees. With the new rules set to take effect from 1 May 2023, we encourage you to reach out if you have any questions.

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