New changes to apply from 1 May 2023 will impact the way employers implement temporary shutdowns.

•  Employers will now need to give employees 28 days’ written notice of any temporary shutdown for a particular period, for example, a shutdown over the Christmas/New Year period.
•  Employers will not be permitted to direct/enforce employees to take leave without pay during a temporary shutdown.
•  Businesses covered under the 78 affected awards should review any current leave policies, employment contracts and procedures that cover temporary shutdowns. *A list of affected awards is provided at the end of this alert. 

What is changing?

The Fair Work Commission has varied 78 modern awards relating to an employer’s ability to direct employees to take a period of annual leave when an employer shuts down all or part of its business.

The changes are:

•  Employers must provide at least 28 days’ written notice of the temporary shutdown period (or a longer period if the term preserves an existing longer period of notice).
•  If an employee is engaged within the 28-day notice period, notice of the temporary shutdown must be provided as soon as reasonably practicable after engagement.
•  Any direction by the employer to take annual leave must be in writing and be reasonable.
•  Employers may direct an employee to take a period of paid annual leave to which the employee has accrued an entitlement during a temporary shutdown period. 
•  Employees can now only take paid annual leave in accordance with a direction under the shutdown term.
•  Employers cannot direct or enforce an employee to take unpaid leave/leave without pay during a temporary shutdown period.
•  An employer and an employee may agree, in writing, for the employee to take unpaid leave during a shutdown period once an employee’s paid annual leave has been exhausted.
•  Where an employee has not accrued enough paid annual leave to cover the period of the shutdown, the employee may take paid annual leave in advance of accruing the entitlement in accordance with the existing “annual leave in advance” term contained in each modern award.
•  The circumstances in which a temporary shutdown can occur have been narrowed to where the employer intends to shut down all or part of its operation for a particular period and the employer wishes to require affected employees to take paid annual leave during that period. Certain model terms still preserve the entitlement to shut down operations in some industry-specific circumstances, including for example when a drilling rig is being repaired in the Hydrocarbons Industry (Upstream) Award 2020.
•  The new terms confirm that when calculating the amount of paid annual leave accrued by an employee, any leave taken in advance pursuant to the “annual leave in advance” clause must be taken into account.
•  New shutdown clauses now confirm that periods of annual leave taken for the purposes of a temporary shutdown do not apply for the purposes of the existing excessive leave provisions contained in modern awards.

What if an employee does not agree to take unpaid leave during a temporary shutdown?

Where an employee does not have sufficient annual leave to cover the shutdown period (or part of the shutdown period), and they do not agree to take unpaid leave, then the employer is required to either:

1. provide the employee with work to complete on their ordinary working days and pay the employee at their usual pay rate or
2. pay employees for the shut down period. 

In effect, this means that employees who exhaust their annual leave throughout the year, may receive an additional period of paid leave over the shutdown period.  From 1 May 2023, the model clause will prevent, subject to a written agreement between the employer and employee, the employer enforcing unpaid leave during the shutdown period.

How can businesses prepare for the changes?

Employers with employees covered by the 78 modern awards impacted by the decision should take the following steps to prepare for and accommodate the incoming changes on 1 May 2023:

•  Review any current leave policies, employment contracts and procedures regarding annual shutdowns and update documents relating to award-covered employees impacted by the changes.
•  Exercise diligence when approving annual leave requests from employees to ensure that all employees will have sufficient annual leave to cover the full duration of any shutdown period.
•  Have a discussion with your HR team or business partners regarding the future change. This includes factoring in the updated notice periods and requirements to take paid leave.
•  Update payroll and employee management systems to ensure employees can access leave in advance and ensure that employees’ annual leave entitlements are being properly accrued and accounted for.

Which awards are impacted?

1. Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020 (clause 22.3)
2. Aircraft Cabin Crew Award 2020 (clause 19.4)
3. Airline Operations–Ground Staff Award 2020 (clause 22.6)
4. Alpine Resorts Award 2020 (clause 25.3)
5. Aluminium Industry Award 2020 (clause 22.4)
6. Ambulance and Patient Transport Industry Award 2020 (clause 22.7)
7. Animal Care and Veterinary Services Award 2020 (clause 22.5)
8. Aquaculture Industry Award 2020 (clause 22.9)
9. Asphalt Industry Award 2020 (clause 21.8)
10. Banking, Finance and Insurance Award 2020 (clause 22.5)
11. Black Coal Mining Industry Award 2020 (clause 24.9)
12. Broadcasting and Recorded Entertainment Award 2020 (clause 18.6)
13. Building and Construction General On-site Award 2020 (clause 31.3)
14. Business Equipment Award 2020 (clause 23.5)
15. Car Parking Award 2020 (clause 24.6)
16. Cemetery Industry Award 2020 (clause 19.3)
17. Cement, Lime and Quarrying Award 2020 (clause 22.8)
18. Cleaning Services Award 2020 (clause 21.4)
19. Clerks—Private Sector Award 2020 (clause 32.5)
20. Coal Export Terminals Award 2020 (clause 20.7)
21. Commercial Sales Award 2020 (clause 20.6)
22. Concrete Products Award 2020 (clause 22.6)
23. Contract Call Centres Award 2020 (clause 22.10)
24. Educational Services (Post-Secondary Education) Award 2020 (clause 22.5)
25. Electrical Power Industry Award 2020 (clause 21.8)
26. Electrical, Electronic and Communications Contracting Award 2020 (clause 21.5)
27. Fitness Industry Award 2020 (clause 21.3)
28. Food, Beverage and Tobacco Manufacturing Award 2020 (clause 25.11)
29. Gardening and Landscaping Services Award 2020 (clause 20.9)
30. Gas Industry Award 2020 (clause 20.7)
31. General Retail Industry Award 2020 (clause 28.4)
32. Graphic Arts, Printing and Publishing Award 2020 (clause 31.12)
33. Hair and Beauty Industry Award 2020 (clause 24.3)
34. Health Professionals and Support Services Award 2020 (clause 26.5)
35. Higher Education Industry—General Staff—Award 2020 (clause 24.4)
36. Horse and Greyhound Training Award 2020 (clause 18.6)
37. Hospitality Industry (General) Award 2020 (clause 30.4)
38. Hydrocarbons Industry (Upstream) Award 2020 (clause 25.7)
39. Joinery and Building Trades Award 2020 (clause 27.9)
40. Journalists Published Media Award 2020 (clause 20.8)
41. Legal Services Award 2020 (clause 22.7)
42. Local Government Industry Award 2020 (clause 23.5)
43. Manufacturing and Associated Industries and Occupations Award 2020 (clause 34.7)
44. Meat Industry Award 2020 (clause 25.8)
45. Mining Industry Award 2020 (clause 22.7)
46. Mobile Crane Hiring Award 2020 (clause 24.6)
47. Miscellaneous Award 2020 (clause 21.4)
48. Nursery Award 2020 (clause 22.12)
49. Nurses Award 2020 (clause 22.7)
50. Oil Refining and Manufacturing Award 2020 (clause 24.6)
51. Pest Control Industry Award 2020 (clause 23.9)
52. Pharmaceutical Industry Award 2020 (clause 21.5)
53. Plumbing and Fire Sprinklers Award 2020 (clause 24.4)
54. Poultry Processing Award 2020 (clause 21.5)
55. Premixed Concrete Award 2020 (clause 22.8)
56. Professional Employees Award 2020 (clause 18.4)
57. Racing Clubs Events Award 2020 (clause 23.5)
58. Racing Industry Ground Maintenance Award 2020 (clause 21.5)
59. Real Estate Industry Award 2020 (clause 20.5(a))
60. Registered and Licensed Clubs Award 2020 (clause 25.4)
61. Restaurant Industry Award 2020 (clause 25.4)
62. Road Transport (Long Distance Operations) Award 2020 (clause 20.4)
63. Road Transport and Distribution Award 2020 (clause 24.9)
64. Salt Industry Award 2020 (clause 23.10)
65. Seafood Processing Award 2020 (clause 21.11)
66. Security Services Industry Award 2020 (clause 21.4)
67. Silviculture Award 2020 (clause 22.5)
68. Storage Services and Wholesale Award 2020 (clause 24.5)
69. Sugar Industry Award 2020 (clause 31.5)
70. Supported Employment Services Award 2020 (clause 32.3)
71. Surveying Award 2020 (clause 22.7)
72. Telecommunications Services Award 2020 (clause 22.9)
73. Textile, Clothing, Footwear and Associated Industries Award 2020 (clause 32.6)
74. Timber Industry Award 2020 (clause 28.10)
75. Vehicle Repair, Services and Retail Award 2020 (clause 29.6)
76. Water Industry Award 2020 (clause 22.4)
77. Wine Industry Award 2020 (clause 24.9)
78. Wool Storage, Sampling and Testing Award 2020 (clause 23.5)