Key modern award changes – employers can no longer direct employees to take unpaid leave in shutdown periods
Posted on May 04, 2023
It is common for employers to direct employees with insufficient accrued annual leave to instead take unpaid leave during temporary shutdown periods such as the Christmas and New Year holiday period.
However, from 1 May 2023, amendments made to 78 modern awards commenced, and many employers will lose the right to direct employees to take unpaid leave if they do not have enough annual leave accrued to cover the shutdown period. These awards include:
- Building and Construction General On-site Award 2020;
- Plumbing and Fire Sprinklers Award 2020;
- Clerks – Private Sector Award 2020;
- Electrical, Electronic and Communications Contracting Award 2020;
- General Retail Industry Award 2020;
- Higher Education Industry – General Staff – Award 2020;
- Hospitality Industry (General) Award 2020;
- Manufacturing and Associated Industries and Occupations Award 2020; and
- Professional Employees Award 2020.
Summary of amendments
The amendments are part of the Fair Work Commission’s four yearly modern award review, where the Fair Work Commission decided to standardise the annual leave shutdown provisions in most modern awards by inserting a new model clause for shutdowns.
Currently, many awards have provisions outlining how an employer can require an employee to take leave during the shutdown period, whether paid or unpaid leave. We note that some awards are more prescriptive than others.
Insufficient annual leave
The model clause provides that an employer will not be able to require or direct an employee to take unpaid leave during temporary shutdown periods if the employee does not have sufficient annual leave. However, a period of unpaid leave can be agreed upon in writing between an employer and employee, and an employee can come to an arrangement with their employer to take annual leave in advance of it being accrued (also referred to as “negative annual leave” or “annual leave in advance”).
This means that if an employee does not have sufficient accrued annual leave to cover the shutdown period and they do not agree to take unpaid leave or the employer does not allow for annual leave in advance, then the employee may be entitled to continue to work during shutdown, or if there are no suitable duties, be paid wages during the shutdown period.
Accrued annual leave
The model clause allows an employer to direct its employees to take a period of paid annual leave during a temporary shutdown period only if the direction is in writing, is reasonable and provided that the employee has accrued such an entitlement to annual leave.
The model clause also provides for new notice requirements. Employers must give employees at least 28 days written notice (or longer if stipulated) of a temporary shutdown period. If an employee starts after the notice is given then they must be given notice of the shutdown period as soon as reasonably practicable after starting.
Key takeaways
Employers who are covered by the affected awards will need to ensure that they comply with the new model clause. Employers will be required to work with employees where the employee does not have sufficient annual leave to cover shutdown periods. Employers are still able to direct employees to take annual leave provided it meets the requirements in the model clause.
Employers should review their leave policies, procedures and contract clauses covering annual leave to reflect the amendments.
Please contact our workplace relations team if you require assistance.
