Shutting down for the Christmas break?

It’s the time of year we all start to look forward to the Christmas break and for most businesses, this means it is also time to think about making arrangements for staff over the holiday period. Whether you intend to shut down entirely for the Christmas/New Year period, work through this period or maintain a skeleton staff, there are some things to be aware of in order to avoid breaching the Fair Work Act 2009.

Photography / Rexness

Photography / Rexness

Shutting down?

a)      Award covered employees

If you intend to shut down over the Christmas period, the first step is to determine whether an award covers your employees and review its terms. Most awards allow employers to direct employees to take annual leave during an annual shut down, subject to complying with the terms of the relevant award. By way of example, the Clerks Private Sector Award 2010 provides that “an employer may require an employee to take annual leave as part of a close-down of its operations, by giving at least four weeks’ notice”. This is a reasonably common provision, which means notices requiring employees to take leave over the Christmas period should generally be given over the next week or so.

b)      Collective/enterprise agreement covered employees

You will need to refer to the applicable collective/enterprise agreement to determine what specific provisions you will need to comply with in the event you intend to direct employees to take annual leave during a period of shutdown.

c)       Award/agreement free employees

Employers can direct award/agreement free employees to take annual leave during an annual shut down provided the request is reasonable.  In practice, this means that there should be:

  • a proper basis for the direction to take leave, which will ordinarily be the case where there is an annual shut down; and
  • employees should be given reasonable notice of the requirement to take leave. Four weeks’ notice is typically considered a reasonable period of notice.

d)      Don’t forget to review contracts and policies too

We also recommend that employers review and comply with any contractual terms and company policies dealing with annual shut downs, provided that any more generous award or agreement terms must always be complied with.

What if an employee does not have sufficient leave accrued to cover the shut down period?

Some awards and collective/enterprise agreements allow employers to direct employees to take annual leave in advance, or unpaid leave, where the employee does not have sufficient leave accrued to cover the shut down period.  The approach here will be governed by the terms of the applicable award or agreement.

If there is no applicable award or agreement, or if the applicable instrument is silent, the position is more complex because this issue is not specifically addressed by the Fair Work Act 2009.  While the Act does provide for a direction by the employer that the employee take paid leave where the direction is reasonable – such as during the annual shut down, it is silent on unpaid leave. Employers should seek to reach an agreement with the employee that the employee take either unpaid leave or that leave be paid in advance. (Reference to any annual shut down is also a prudent inclusion in employment contracts).

Employees working over the Christmas break?

Employees who work through the Christmas period are entitled to their ordinary pay, including any penalty rates that apply for working on public holidays. Again, applicable awards, enterprise agreements, contracts and any company policies should be checked to ensure that employees receive the correct rates of pay for their work over the Christmas period.

Still not sure?

If you need any further assistance determining what rules apply to your employees or to prepare shut down notices for employees, please give us a call on 02 8226 8535 or email Patricia ( or Kim (

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