With the end-of-year holiday season fast approaching, small and medium enterprises (SMEs) should begin preparations for how their operations and workforce will adjust to this period.

Some businesses see heightened demand, requiring extended hours or work on public holidays, while others may close or reduce staffing during this time.

This guide from FWC  breaks down essential rules and entitlements for employers and employees to help navigate this season smoothly.

Directing Annual Leave During a Shutdown

When a business closes during the holiday season, rules for directing annual leave vary depending on employees’ awards or agreements.

For Employees Covered by Awards or Agreements:

• Direction Allowed: Employers may require employees to take annual leave if their award or registered agreement allows.
• Conditions:
  • The direction must be reasonable.
  • Notice must be provided in writing within the required period.
• Notice Period: Typically, a 28-day notice is required, but some awards permit a shorter period if mutually agreed.

Example:
Joe, a full-time worker at a food manufacturing company, is informed in late November about a company shutdown from 2 January to 16 January. His manager provides a written 28-day notice, as stipulated by their award.

For Award and Agreement-Free Employees:

• Employers can only direct leave if the direction is reasonable.
• Employees can opt for unpaid leave or annual leave in advance if the award permits and both parties agree.

Awards and Agreements Without Shutdown Rules

If an employee’s award or agreement lacks provisions for shutdowns:

• Employers cannot unilaterally direct annual leave.
• However, employees may agree with employers to take annual leave or unpaid leave.

Employee Work Arrangements During a Shutdown

If a business shuts down but some employees continue working:

• They should receive their normal pay for hours worked.
• Employees are entitled to public holiday leave with pay or, if working, public holiday rates as per their award or agreement.

Overtime and Public Holiday Work Requirements

Employers may request employees to work overtime or on public holidays, provided the request is reasonable. Key considerations include:

• Business needs
• Employee’s role and responsibilities
• Employee’s personal commitments (e.g., family obligations)
• Notice given for the additional hours
• Terms in the employee’s contract

Example:
Sam, a store manager, agrees to work on Boxing Day due to the store’s holiday promotion, viewing the request as reasonable given the retail industry’s nature.

Employees working on public holidays or overtime may be eligible for:

• Penalty rates
• Additional time off
• Extra annual leave

Use the Pay Calculator to determine public holiday pay rates.

Public Holiday Pay for Non-Working Employees

Employees should have the option to work on a public holiday or not.

If a public holiday falls on a regular workday for a full-time or part-time employee:

• They must be paid their base pay rate for their usual hours, even if on annual leave during a shutdown.
• Note: Pay excludes any additional loadings, overtime, or penalty rates usually applied.

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