How to manage annual leave over the Christmas period

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By Joanna Knoth, Senior Associate and Renae Harg, Associate

Annual leave over the Christmas period can be difficult to manage. For some employers, the Christmas period may be a period of slow trade. For others, it may be the busiest time of the year, requiring all hands on deck.

If an employer intends to shut down their business over the Christmas period, they may be able to require their employees to take annual leave during this period, pursuant to an applicable award, enterprise agreement or their contract of employment.

If an employee does not have enough annual leave to take paid annual leave during a Christmas shutdown, some awards and enterprise agreements expressly provide that the employee will be required to take unpaid leave during that period.

For example, the General Retail Industry Award 2010 provides an employer may require an employee to take annual leave as part of a close-down of its operations by giving four weeks’ notice.

Alternatively, an employer may wish to pay their employees leave in advance, noting there may be risks in doing so. Some awards and enterprise agreements contain specific provisions regarding the payment of leave in advance.

Employers should be familiar with the awards or enterprise agreements that apply to their employees and the provisions relating to close down or shut down of their business, leave and leave in advance.

Employees who are award and agreement free may be required to take a period of paid annual leave over a shutdown period, provided the requirement is reasonable. The Fair Work Act 2009 notes that it may be reasonable if the employer’s enterprise is being shut down for a period and includes the example of Christmas and New Year.

On the other hand, an employer may not want an employee to take annual leave over the Christmas period if it is a particularly busy time for the business or if a small number of employees are required to keep the business running.

In these circumstances, an employer must not unreasonably refuse an employee’s request to take annual leave. What is reasonable will depend on the circumstances. In the decision of Stevens v Horsley Park Supermarket Pty Ltd t/as Carlo’s IGA Horsley Park [2017] FWC 4626, it was said that matters such as the nature and size of the employer’s business are relevant to whether it is unreasonable, including any periods of high demand or activity in the business, as well as the period of notice provided for any leave and the delay by the employer in approving the leave.

From a practical perspective, we recommend employers inform employees as early as possible if they will be required to take annual leave over the Christmas period or will be required to work over the Christmas period. Some awards and agreements require that an employee be provided with a certain amount of notice of a shutdown. Ideally, the requirement to take annual leave over the Christmas period (or unpaid leave if the employee does not have sufficient annual leave) should be included in the employee’s contract of employment.

This marks day four of MDC Legal’s 12 days of Christmas blog series, which will address a variety of issues that may arise for both employees and employers throughout the festive season.

MDC Legal are employment law specialists assisting employees, employers and industrial organisations – giving us a unique comprehensive insight into employment law issues.