With the holiday season fast approaching, Australian small business owners are often faced with the task of planning Christmas closures. It’s a time of year when many employees (and Business owners) are eager to take a break, but ensuring fair annual leave arrangements can be challenging. Lets examine some of the angles that need to be considered around the Christmas Close.
1. The Legal Angle: FWA legislation
Under the Fair Work Act 2009, full-time and part-time employees in Australia are entitled to four weeks of paid annual leave each year. For certain sectors, like shift workers, additional leave might apply. Annual leave accrues progressively and is designed to provide employees with a chance to take time off for relaxation, family time, or other personal needs. To me the word entitlement is key: your staff are entitled to leave; it's theirs… so they may not want to or have planned to use it in the Christmas break. So be ready to be a little flexible on the Christmas break time off mandate.
Casual employees, are not entitled to paid annual leave as they receive a casual loading rate to compensate for this. But even casuals may request unpaid leave during the Christmas period if they need time off so again some flexibility may need to be used.
2. Christmas Shutdowns: What Are They?
Many small businesses choose to close during the Christmas and New Year period. This practice, often referred to as a "shutdown" or "stand-down," typically happens when business demand is low, allowing employees and employers alike to enjoy the festive period. For businesses that are able to operate on reduced staff or close completely, a Christmas shutdown can help streamline operations and reduce expenses.
Commonly, Christmas shutdowns might span from Christmas Eve to early January, though specific dates vary by industry and region. If a business does intend to close, planning and communication are key to ensure a smooth transition.
3. Rules Around Mandatory Leave During Shutdowns
In many cases, small businesses may need to request that employees take annual leave during the Christmas closure. However, there are some important regulations to follow:
- Award and Enterprise Agreement Requirements: CHECK your Award or your EBA… or your contract that you issue to your employees. Remembering that an agreement can never contract an employee against an Award condition. If your Award states 6 weeks notice is required for a “forced shut down”, your contract can’t state only 4 weeks is required, but it can state that 8 is required. If your business falls under an industry award or enterprise agreement, there may be specific provisions regarding annual leave during shutdowns. Some awards, like the Hospitality Industry (General) Award or the Manufacturing and Associated Industries Award, include rules that allow employers to require staff to take leave over shutdown periods.
- Fair Notice: If the award or agreement permits, businesses must provide adequate notice (usually four weeks) before requiring staff to use annual leave for a shutdown. This notice period allows employees to plan their leave (and their budgets) and ensures transparency.
- Insufficient Leave Balances: If employees don't have enough accrued leave to cover the shutdown, there are several options:
- Employees may take unpaid leave.
- Advance leave may be arranged, though this should be mutually agreed upon. (probably documented in your contract or a good Leave policy so that it is fair and transparent).
4. Public Holidays and Annual Leave
Public holidays—such as Christmas Day, Boxing Day, and New Year's Day—are generally not deducted from annual leave entitlements if they fall within the shutdown period. If your business closes on these days, employees are entitled to a paid public holiday and should not lose annual leave for that day.
5. Tips for Managing Christmas Annual Leave Requests
To ensure a fair and smooth approach to Christmas closures, here are some best practices:
- Plan Early: Notify employees of the business closure dates as early as possible, ideally by November. (like this week?) This will allow employees to prepare their leave and plan accordingly.
- Communicate Clearly: Send out a memo or email detailing the dates of the closure, public holiday considerations, and any requirements for taking annual leave. This written notice ensures everyone is on the same page.
- Offer Flexibility: If possible, consider flexible arrangements for employees with low annual leave balances. Some businesses allow for a few extra unpaid days if employees would otherwise be left without adequate time off.
- Use Leave Management Software: Digital solutions can help manage annual leave requests and approvals, ensuring records are accurately maintained and employees can easily check their leave balances.
6. FAQs on Christmas Annual Leave for Small Businesses
Q1: Can I force my employees to take annual leave during Christmas?
Yes, if your award or agreement allows it, and with sufficient notice. Generally, four weeks’ notice is required, but check your industry award for specifics.
Q2: What happens if an employee doesn’t have enough leave to cover the shutdown?
In this case, you may consider unpaid leave or offering leave in advance, provided both parties agree. However, unpaid leave is usually the standard fallback.
Q3: How do public holidays affect annual leave during Christmas closures?
Public holidays are not deducted from an employee's annual leave balance. For instance, if Christmas Day falls within your shutdown period, employees should be paid for this day without using up annual leave.
Q4: What if an employee prefers to work instead of taking leave?
This situation might be feasible if you have other staff members available or can arrange for remote or project work. However, you are not obligated to accommodate this preference during an official shutdown.
7. Wrapping Up: Balancing Business Needs with Employee Entitlements
A well-managed Christmas closure can benefit both small business owners and employees, ensuring a refreshing break that enhances productivity and morale in the new year. By being proactive, ensuring fair processes, and adhering to employment standards, small business owners can handle the holiday season in a way that’s both legal and fair.
For more information or specific advice, small business owners should consider consulting with a human resources specialist or legal advisor, especially if they’re unsure about award or enterprise agreement rules.
Happy holidays and best of luck with your business's Christmas planning!
