In August 2022, the FWC considered a clause in the Black Coal Award 2010 that allowed employers to make employees take unpaid leave if they did not have enough annual leave during a shutdown period.

The FWC found that directing an employee to take unpaid leave equates to standing them down unlawfully, which is inconsistent with the Fair Work Act. Unpaid standdown of employees is only allowed in very limited circumstances, such as machinery breakdown or a work stoppage outside the employer’s control, and only where the employee cannot be usefully employed in another part of the business.

Consequently, on 22 December 2022, the FWC amended 77 modern awards that had shutdown/closedown clauses in them.

Before these changes, if an employee did not have enough annual leave to cover that close-down, the employer could direct them to take leave without pay. Now, if an employee does not have enough annual leave to cover the period, they may be given work during that period or elect to have:

1. annual leave paid in advance; or
2. leave without pay.

What should my business do?

Organisations need to plan for a closedown period by:

• Ensuring they are giving employees the required notice from their award or enterprise agreement in writing (generally 28 days), meaning notice for a Christmas closedown needs to be given in mid-November 2023.
• Forecasting which employees will not have enough annual leave to cover that period, and ask them whether they prefer to take unpaid leave (by agreement), some other form of leave, RDOs/time off in lieu, or annual leave paid in advance.
• Considering whether employees who do not have enough annual leave could be directed to use other forms of leave. For example, the Victorian Long Service Leave Act 2018 allows an employer to direct an employee to take long service leave if given at least 12 weeks’ notice – this would mean giving notice in mid-September (approaching soon) to take this leave at Christmas.
• Considering whether any employees who do not have enough annual leave could perform other work during the closedown period.
• Carefully managing annual leave requests during the year so that an employee has enough annual leave at the end of the year (if providing paid annual leave in advance presents difficulties).
• Considering whether employee contracts include any clauses to take leave without pay in these circumstances, and seeking advice as to whether these are compliant with the Fair Work Act.

How the Victorian Chamber can help

The Victorian Chamber’s Workplace Relations Advice Line offers general advice on a wide range of workplace issues, including award and enterprise agreement interpretation, and can assist if you have further questions.

The Victorian Chamber’s Workplace Relations and Wellbeing consultants provide a wide range of assistance helping businesses to consider options and risks in addressing employment issues, and can assist to draft letters to employees. Call the Victorian Chamber Workplace Relations Advice Line on 8662 5222 for more information.