Your modern award shutdown provisions refresher for the upcoming holiday season

As we get closer and closer to the end of the year and the feeling of summer grows, employees and employers alike start to wonder what they’ll do with their holidays. And while some businesses operate year-round, others might close over the holiday season and give their employees a well-deserved break.

It was in May this year that the Fair Work Commission (FWC) announced amendments that changed shutdown provisions within most modern awards impacting the way businesses implement shutdown periods. These changes came into place on 1 May 2023, and involved the introduction of a standard clause, or model term, with consistent wording across all 78 affected awards.

A recap on what’s been amended in these modern awards

It was deemed that existing shutdown provisions within modern awards were problematic because of how unpaid leave was granted. Where some awards allowed employees to take unpaid leave even if they had accrued annual leave balances, others contained clauses that gave employers the right to direct employees to take unpaid leave.

The ability to direct employees to take leave without pay is akin to standing down an employee without pay, which can only be done under the general stand-down provisions in the Fair Work Act 2009 (Cth) (FW Act) or following an enterprise agreement or contract of employment.

Accordingly, the FWC deemed it important to adjust the wording of the shutdown provisions of modern awards and implement a model clause that instead provides for an agreement to be made between an employee and employer to take unpaid leave, rather than allowing an employer the ability to direct such leave.

The model clause updates the shutdown provisions in the following way:

1. any reference that employers are allowed to direct an employee to take leave without pay during a temporary shutdown period has been removed;
2. an employer can only implement a temporary shutdown where it intends to shut down all or part of its operation for a particular period (i.e., the Christmas period) and wants to require affected employees to take paid annual leave for that period (note that certain awards still allow an employer to implement a shutdown period in specific circumstances related to their industry);
3. employers must provide employees with at least 28 days’ written notice of the temporary shutdown period;
4. if a new employee commences employment within the 28-day notice period, notice of the temporary shutdown must be provided as soon as reasonably practicable after engagement;
5. an employer may direct an employee to take annual leave during the shutdown period as long as the direction is in writing and is reasonable;
6. if employers have provided a direction to an employee to take annual leave during the shutdown period, and the direction is in writing and is reasonable, the employee must take paid annual leave during the shutdown period;
7. an employee who doesn’t have enough paid annual leave to cover the shutdown period may come to an agreement with their employer for other options including using accrued time off, annual leave in advance or leave without pay.

However, importantly, an employer is no longer able to direct employees to take a period of unpaid leave over the shutdown period, even in circumstances where the employee doesn’t have enough annual leave accrued to cover the shutdown period – leave without pay can only be made with the employee’s agreement.

For more information about the changes to shutdown provisions, please see our in-depth article here.

About our author

Cala Ahmed is a Senior Workplace Relations Consultant and assists a variety of clients via the HR Advice Line. She is currently studying for a Bachelor of Business/Law.

Amanda Curatore is a qualified Senior Associate at Citation Legal and Citation HR. Amanda is highly experienced in providing workplace relations advice and assistance to clients in a wide range of matters including employment contracts, modern award interpretation, managing performance, bullying and harassment, terminations and managing risk.