End-of-year shutdowns and annual leave: FAQs for business leaders

As the end of the year gets closer, many businesses are planning a shutdown or preparing for a quieter December and January. It’s also when we get the most questions about leave.

Before we dive into the FAQs, a quick reminder: if your business is covered by a Modern Award or if specific terms are outlined in your employment contracts, make sure you're guided by those in the first instance. They often contain important details that affect how things like shutdowns or leave can be managed.
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1. Can you make your team take leave during a shutdown?

Yes, in most cases you can require your team to take annual leave during a temporary shutdown (like over the Christmas/New Year period), but there are a few rules to follow.

Make sure you give plenty of notice in writing. Most Modern Awards require at least four weeks’ notice, but some might need more, so it’s worth double-checking.
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2. What are your options if some employees don’t have enough leave to cover the shutdown period?

It’s a good idea to have a conversation with affected employees early, so they’re not caught off guard.

If team members don’t have enough annual leave to cover the closure period:

• First be guided by what the relevant Award says about leave during shutdowns.
• Consider offering employees the option of taking leave in advance, even if it results in a negative leave balance, or alternatively, agree to them to take leave without pay during this period.
• Think about what approach best balances employee morale and works for your business over the break.

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3. How long can a shutdown be?

Although there is no set limit for a shutdown period in the Fair Work Act, it is important to ensure it’s a reasonable and fair timeframe.

Shutdowns are generally between one and three weeks, but what’s reasonable depends on your business and specific situation. The answer here can vary, so if you're unsure and need support, get in touch. Our HR partners can talk through your options and offer tailored advice.

If the break is for a longer period, it’s more likely some employees won’t have enough leave to cover it, so you’ll need to agree on the other options mentioned above.
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4. Can you ask employees to take extra leave outside a specific shutdown?  

Whether you’re shutting down for a few weeks, or staying open, you might also experience some quieter months over December to January.

You can offer or suggest to your team that this is a great time to take extra leave (especially if they’ve got a healthy leave balance). Some team members may welcome the break, while others may prefer to work through.
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5. Do casual employees get paid during shutdown periods?

No. Casuals don’t accrue annual leave and are not paid when the business temporarily closes (such as over Christmas and New Year).
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6. Can you decline a leave request?

Yes, but an employer can only decline a request for annual leave on "reasonable business grounds" and the reason should be provided in writing.

Examples of reasonable business grounds might include:

• Operational needs: such as peak periods or set staffing requirements.
• Leave clashes: when other employees are on leave during the same period, and approving leave would result in being short-staffed.

A few things to keep in mind:

• Be fair and consistent, especially if you’re juggling multiple requests across the team
• If you're declining someone's leave request:
  
  • Communicate early so non one’s disappointed last-minute.
  • See if you can find a compromise or offer alternative dates.
• Consider offering for them to submit their EOY leave preferences early for the following year.
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Still have questions?

Every business and situation is different. If you’ve got questions about managing leave or shutdowns, get in touch with our team. Our HR partners are here to help you find an approach that works for your business and your people.
Get in touch.