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November 2021 Newsletter

Everything you need to know about a Christmas/New Year shut down

Many businesses choose to close over the Christmas/New Year period. In this update, we explain what you need to know and whether you can ask your employees to take leave.

When are the public holidays over the Christmas/New Year period?

Christmas Day (25th December), Boxing Day (26th of December) and New Year’s Day (1st of January) all fall on a weekend this year.  As such, many states have designated additional public holidays on Monday the 27th of December, Tuesday the 28th of December and Monday the 3rd of January.

To check the public holidays for the state/s that you operate, click here.

Can we shut down and ask employees to take annual leave?

You can request employees to take annual leave during a shutdown period if they are covered by a modern award or enterprise agreement that allows this. For example, clause 32.5 of the Clerks Private Sector Award 2020 states:
“An employer may require an employee to take annual leave as part of a close-down of its operations, by giving at least 4 weeks’ notice”.

For award free employees (that is employees who perform a position that is not covered by a modern award or registered agreement) section 94(5) of the Fair Work Act 2009 states that an employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is  reasonable. It goes on to state that requesting employees to take leave over the Christmas/New Year period due to a shutdown may be reasonable.

What if employees do not have enough annual leave over the shutdown period?

If employees do not have adequate annual leave to cover the shutdown period, you may wish to allow them to take annual leave in advance, or if agreed to by the employee leave without pay.

Considering the above, what are the practical steps I should take if we want to shut down over the Christmas period?

Step one: Check the modern award or registered agreement provisions.

Step two: Notify employees in accordance with the above provisions. It is likely you may have a number of modern awards and award free employees at your workplace, so ensure you are adhering to all the award requirements.

Step three: Work with employees who don’t have enough annual leave to either take annual leave in advance or if the employee agrees, leave without pay.

Step four: Ensure all leave is applied for/approved prior to the shutdown.

Managing the new casual requirements

You will recall in our previous updates that we had discussed at length the new requirements for all employers (other than small business employers with less than 15 employees) to ensure that casual employees had their hours of work reviewed on their 12-month anniversary to determine if they were eligible to convert their employment to permanent part time or full time.

Under the new arrangements, all existing casual employees who commenced employment prior to the 27th of March 2021 should have now been assessed and notified of the outcome.

As a business, you now have an obligation to assess every casual on their 12-month anniversary and notify them within 21 days of the outcome.

To support you with putting in place a process to manage this, we have developed the following documents:

  1. Casual conversion policy to ensure compliance with the new provisions
  2. Template letters to notify employees of the outcome

Click here to access.

We recommend you put in place a process to notify you of an employee’s 12-month anniversary (e.g. notification in your payroll system or HRIS) to ensure every casual employee is notified of the outcome within 21 days of their 12 month anniversary.

Managing excessive annual leave balances

A year of lockdowns, state border closures and bans on international travel have seen many employees choose to continue working, instead of taking their annual leave. Employers are now in a situation with many employees having excessive annual leave balances.

What are your options to manage excessive annual leave balances?

For award free employees (any employee who’s role does not fall within a modern award or registered agreement), you can require an employee to take leave if the request is reasonable. According to the National Employment Standards, the following are all relevant considerations:

  • the needs of both the employee and the employer’s business
  • any agreed arrangement with the employee
  • the custom and practice in the business
  • the timing of the requirement or direction to take leave, and
  • the reasonableness of the period of notice given by the employee to take leave.

Examples of a reasonable request include the employee has accrued an excessive amount of annual leave (eg eight weeks or more), or the employer’s business is being shut down for a period (Christmas–New Year close down).

For employees covered by a modern award, this depends on what the award dictates. For example, the Clerks Private Sector Award 2020 states

An employee has an excessive leave accrual if the employee has accrued more than 8 weeks’ paid annual leave (or 10 weeks’ paid annual leave for a shift worker, as defined by clause 32.2).

(b) If an employee has an excessive leave accrual, the employer or the employee may seek to confer with the other and genuinely try to reach agreement on how to reduce or eliminate the excessive leave accrual.

(c) Clause 32.7 sets out how an employer may direct an employee who has an excessive leave accrual to take paid annual leave.

(d) Clause 32.8 sets out how an employee who has an excessive leave accrual may require an employer to grant paid annual leave requested by the employee.

Another option is to allow employees the option to cash out some annual leave. For award or agreement covered employees, annual leave may only be cashed out in accordance with the provisions of the award or agreement.

For award/agreement free employees cashing out annual leave is only allowed if the employee has a balance of at least 4 weeks remaining and both the employer/employee agree. The arrangement should be recorded in writing.

Keep in mind annual leave serves a purpose in ensuring employees are taking much needed breaks from work. Whilst cashing out annual leave may serve a purpose at a particular point in time, employees should be encouraged to take regular breaks from work to manage their overall well-being.

Your HR end of year checklist

As the year begins to come to a close, now is a good opportunity to make sure you do a quick check in on your HR documentation and practices to ensure you are being compliant and have in place the appropriate resources to support your business and team.

The below checklist is a great starting point. For a more comprehensive review, you may wish to consider our HR Compliance Audit or HR Performance Audit. Further information regarding both of these audits is available here.

  • Contracts of employment have been reviewed within the last 12 months to incorporate recent changes (e.g. super increase to 10%, change to definition of casual employees)
  • Policies have been reviewed in the last 12 months
  • Bullying, harassment, and discrimination training has been facilitated for all employees
  • Workers compensation insurance coverage is operative in every state where employees are based.
  • Performance reviews have been conducted at least twice in the last 12 months to ensure employees have been provided with regular feedback and given an opportunity to provide feedback to their leader.
  • Award compliance – the business has identified the applicable modern awards and classification for all positions in the business. Employees are paid at or above the modern award requirements.
  • The business has undertaken a market remuneration benchmarking exercise within the last 12 months to ensure the salaries they pay are at or above market rates
  • A process has been put in place to manage the new casual employee requirements
  • An employee engagement survey (or another method for obtaining employee feedback) has taken place in the last 12 months and an action plan with initiatives to address feedback has been developed and rolled out.
  • The business has assessed its flexible work arrangements and put in place a policy supporting flexibility in the workplace
  • A review of position descriptions has taken place in the last 12 months to ensure every employee has a position description that clearly defines their role requirements and key performance measures.