Can I Direct an Employee to Take Leave for the Christmas Holidays?

Under the National Employment Standards (NES) at section 87 of Fair Work Act 2009 (FW Act), employees with the exception of casuals are entitled to paid annual leave.

In general, annual leave may be taken for a period agreed to by both the employee and employer. However Modern Awards, enterprise agreements, contracts of employment and workplace policies may set out processes for employees to request annual leave.

Under the FW Act, an employer may direct an employee to take annual leave during a shutdown period where:

1. A term in a Modern Award or EBA allows an employer to direct an employee to take paid annual leave to that extend that the direction is reasonable; or
2. An award or agreement free employee is directed to take paid annual leave and that direction is reasonable.

The most common examples of shutdown periods include:

• Christmas/New Year period;
• Renovations of the employers workplace;
• Plant or machinery is inoperable due to maintenance;
• There is a seasonal or other downturn in the demand for the employers products and services; and
• There is an oversupply of an employers products and services where there is a requirement for production to stop.

When considering the reasonableness of a directing an employee to take annual leave, the following considerations are taken into account:

• Any agreement between the employer and employee;
• The standard customs or practice of the business;
• the timing of the direction to take leave;
• the reasonableness of the notice period given to the employee to take leave; and
• Any needs of the employee and the employer’s business.

Employers relying on a Modern Award clause to direct an employee to take annual leave during a shutdown must take note of the recent decision Re 4 yearly review of Modern Awards – Plain language [2022] FWCFB 161 implementing the Model Shutdown term into 78 Modern Awards which took effect from 1 May 2023.

Under the Model Shutdown Clause, where employers intend to shut down and  require an employee to take leave during this period, the employer must:

1. Give the employee 28 days notice in writing of the shutdown or any other shorter period agreed to by the employee and employer.
2. Give the employee a written direction to take paid annual leave if the employee has accrued an entitlement to paid annual leave and the direction to take paid annual leave must be reasonable.
3. Agree in writing with the employee for the employee to take unpaid leave during the shutdown period in the instance that the employee has not accrued sufficient paid annual leave for the shutdown period.

However, it must be noted that all Modern Award may vary on these requirements.

To ensure employers comply with their legal obligations regarding the Christmas shutdown period, it is best practice to:

1. Determine if a shutdown period is an operational requirement of the business as early as possible to allow sufficient time for planning, notification and leave management.
2. Determine and understand the procedural requirements of the relevant shutdown provisions that apply to your organisation for example, under the Clerks Private Sector Award the Shutdown provisions are located at clause 32.5. If the applicable Modern Award is silent on the matter, consider reaching an agreement with the employees to take annual leave during the Christmas shutdown period (i.e employment contract, workplace policies).
3. Manage leave requests throughout the year to ensure that the employees will have sufficient paid annual leave to take during the Christmas shutdown period. However, employers must exercise caution to ensure they do not unreasonably refuse an employee to take paid annual leave.
4. Consider the circumstances of each individual employee to ensure the direction to take paid annual leave during the Christmas shutdown period is not unreasonable.
5. Consult with employees in relation to the Christmas shutdown period before giving them written notice and provide them with general information regarding:

• • The reason for the shutdown;
  • The proposed length of the shutdown;
  • The requirement of the employee to take leave during the shutdown;
  • How leave will be managed during the shutdown including the number of days to be deducted from their leave balances and their pay during the period; and
  • Any public holidays during the shutdown period and confirmation that the annual leave will not be deducted for their entitlement to public holidays.

6. Provide employees with 28 days notice in writing confirming the above mentioned topics in paragraph (4)  unless the applicable Modern Award requires a longer period of notice in which case provide the stipulated amount of notice in the Modern Award.

Christmas and New Year Public Holidays

In Western Australia, the declared public holidays over the Christmas/New Year period include:

• Monday 25 December 2023 – Christmas Day;
• Tuesday 26 December 2023 – Boxing Day; and
• Monday 1 January 2024 – New Years Day.

Employers must ensure they are compliant with their employee’s entitlements with respect to public holidays.