Have you given notice for your 2026 Christmas shutdown?

The annual shutdown during the Christmas and New Year holiday period is industry practice for the residential building industry, but if you have employees covered by a modern award, there are rules and requirements that must be followed when preparing for the shutdown period.

If you do intend to have staff work over the shutdown period, recent Court findings have clarified that employers may only request and cannot direct staff to work.

What the rules say – directing staff to take leave

An employer may close or shutdown all or part of the business, such as a particular site, over the Christmas and New Year period.  During a shutdown, the employer may direct employees to take paid annual leave for all or part of the closure, effectively requiring them to “use up” their leave entitlement.

This is subject to the following conditions:

• Notice: Employers must give affected employees at least two months’ notice (This two-month figure applies under clause 31.3 of the Building and Construction General On-Site Award 2020; other modern awards with shutdown provisions require different periods (such as 28 days) so check the relevant awards that cover your employees for the specific requirements.
• In writing: the notice must be in writing, be reasonable and provided to all affected employees.
• Insufficient leave: an employee who has not accrued enough leave to cover the whole shutdown may take a period of leave in advance.
• Leave in advance: an employer and employee may agree in writing to take a period of annual leave before they have accrued the entitlement. The agreement must be in accordance with the Award conditions and requirements. For the remainder, the employer and employee must agree in writing for the employee to take unpaid leave – employers can no longer simply direct this. If no agreement is reached, the employer will generally need to pay the employee’s ordinary salary wages for that part of the shutdown. In such a situation, the employer might choose to give the employee tasks to complete during the shutdown, rather than paying them for time in which they perform no duties.
• Asking staff to work on Christmas, boxing day or other public holidays: The Courts have clarified that employers can only request staff to work on public holidays, especially Christmas – they cannot be directed or instructed. Requests must be genuine, in writing, be made with reasonable notice and note that employees are not automatically required to work on public holidays under the National Employment Standards.
• Continuity of service: Any period of paid leave taken as a result of a shutdown counts as service with the employer.

For full details on how the shutdown rules work, see the Fair Work Ombudsman’s guide, Direction to take annual leave during a shutdown.

What businesses need to do now

It’s important for businesses to start preparing for the annual shutdown period by:

Reviewing employee leave balances

Businesses should monitor and manage employees’ annual leave during the year to determine which, if any, employees will not have sufficient leave to cover the shutdown period.

Communication should start early if you plan to request staff to take leave in advance or leave without pay or work alternative duties over the Christmas period.

Establishing or updating annual leave workplace policies

Does your business have a policy which deals with:

• the annual shutdown period;
• the taking of annual leave throughout the year;
• employees taking annual leave in advance; and
• an employer’s right to refuse annual leave requests if the employee will not have sufficient leave to cover the shutdown period?

Managing annual leave requests

The Fair Work Act provides employers with the right to refuse annual leave requests provided the refusal is not unreasonable.  Businesses may need to consider refusing annual leave requests if the taking of annual leave will result in employees not having sufficient leave to cover a shutdown period.

As the shutdown period is an established feature of the building industry, it is unlikely to be considered unreasonable for an employer to refuse annual leave requests during the year, unless there are strong reasons to support the employee’s leave request.  When receiving and responding to annual leave requests it is best practice to document the request and response.

Utilising other leave arrangements

If your employee doesn’t have sufficient annual leave, there are other leave entitlements the employee may choose to use to cover the shutdown period (at their own election) including:

• Accrued days off
• Time in lieu of overtime; or
• Annual leave in advance

If the employee has no other leave to draw on, the employer and employee will need to agree in writing to unpaid leave for the remaining period.  If no agreement is reached, the employer will generally need to pay the employee’s ordinary wages for that part of the shutdown or allow them to work.

Giving proper notice

Once you know who will be affected, give all affected employees at least two months’ notice of the shutdown (or 28 days if a different award applies to your business).

If an employee starts after the notice has been provided, you must provide them the written notice as soon as practicable after they commence work. 

To find out more, contact HIA's Contracts and Compliance team

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The above is intended to provide general information in summary form. The content does not constitute specific advice and should not be relied upon as such. Formal advice should be sought by members and customers with respect to particular matters before taking action.