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Fair Work announced changes to 78 modern awards in May 2023. These changes impact an employer’s ability to direct employees to take annual leave when employers implement annual shutdowns.
Such changes were implemented as the Commission had stated that changes were needed to certain modern awards. This was because the existing shutdown clauses did not satisfy the modern award objectives per section 134 of the Fair Work Act 2009 (Cth). The ability to direct an employee to take leave without pay was analogous to standing down an employee without pay, a direction that that can only be given in accordance with the general stand down provisions located in section 524(1) of the Act or per an enterprise agreement or contract of employment in section 524(2).
The changes implemented are outlined below.
Key Changes
The new rules mean the following:
- Employers may require employees to take paid annual leave during a temporary shutdown
- Employers must provide minimum 28 days’ written notice of the temporary shutdown period to all impacted employees
- The requirement to take annual leave must be reasonable
- The notice period can be reduced through an agreement between the employer and the majority of impacted employees
- An employee who does not have enough paid annual leave to cover the whole period can form an agreement with their employer for other options for the days not covered, such as using accrued time off, annual leave in advance or leave without pay
Who does the changes apply to?
The new rules apply to employees and employers covered by one of the affected awards. This includes popular awards and industries such as building and construction, hair and beauty, hospitality and real estate.
See the list of awards that are changing here.
Consequences for Employers
The changes do not prevent employers with annual temporary shut down periods from directing employees to take paid annual leave. However, employers covered by these awards must comply with the new clause and its requirements for any shutdown period if employees do not have sufficient accrued annual leave.
There are steps employers can take to accommodate these changes. This includes reviewing current procedures and guidelines governing annual shutdowns to update materials, providing additional training to managers and business partners regarding valid directions and to update payroll systems to ensure employees’ annual leave entitlements are being properly accrued and accounted for.
How can Cogent Legal help?
If you are seeking advice regarding the impact of these changes upon your business, please do not hesitate to contact our office. We assist employees and employers with employment law matters.