Preparing for the 2023 annual shutdown

The annual shutdown during the Christmas and New Year holiday period is industry practice for the residential building industry, but this year employers must prepare for some changes in practice. If you have employees covered by a modern award, there are new rules and requirements that must be followed when preparing for the shutdown period. 

What has changed? 

Previously, employers were able to direct employees to take unpaid leave during the annual shutdown period where an employee did not have sufficient annual leave for the period. 

From 1 May 2023, amendments to modern awards will mean that employers must only direct employees to take paid annual leave (where available).  

If an employee does not have sufficient annual leave to cover the shutdown, the employee may elect to take leave without pay or annual leave in advance. 

What do businesses need to do now?

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

1. 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.

2. 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;
• Employee’s 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.

If you don’t, now is the time to get these workplace policies in place. HIA’s HR Docs can assist you with workplace policies.

3. 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 employee’s 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 employees leave request. When receiving and responding to annual leave requests, it is best practice to document the request and response also.

4. Utilising other leave arrangements

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

• Accrued days off;
• time off in lieu of overtime; or
• annual leave in advance.

On termination employers are permitted to deduct any money due to the employer that is equal to the amount paid to the employee for leave in advance that has not yet been accrued.