Annual shut down

An employer can temporarily close their business or workplace during slow business periods, like between Christmas and New Year or during school holidays. This is called a shut down.

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This depends on what your award or agreement says. You can check your award using our Award Finder External link icon.

Most awards and agreements let your employer direct you to take paid annual leave during a shut down. However, the requirement to take annual leave has to be ‘reasonable’.

If you don’t have enough annual leave, your award or agreement might say that you have to take unpaid leave.

Some awards don’t say that your employer can direct you to take your annual leave. If your award or agreement doesn’t, then you can agree to take:

  • paid annual leave
  • unpaid leave
  • annual leave in advance.

If you don’t agree to take leave, then you’re entitled to be paid your usual wages.

If you’re not covered by an award or agreement your employer can direct you to take paid annual leave. However, the requirement to take annual leave must be reasonable. If you don’t have enough leave, you may agree to take unpaid leave or annual leave in advance. However your employer cannot direct you to take unpaid leave or annual leave in advance.

For a requirement to take annual leave to be ‘reasonable’, an employer needs to consider:

  • the needs of both the employee and the business
  • any agreed arrangement with the employee
  • what is usual for the business
  • the timing of the direction to take leave
  • a fair amount of notice to the employee to take leave.

It’s generally reasonable to ask employees to take annual leave during a shut down over Christmas and New Year.

Check the award or agreement that covers them. Some awards and agreements say that an employee has to take unpaid leave in this situation.

If the award or agreement doesn’t have any rules about this, you can either:

  • ask your employee to take annual leave in advance during the shut down
  • ask your employee to agree to take unpaid leave.

If your employee doesn’t agree to take annual leave in advance, or to take unpaid leave, they are entitled to be paid during this period at their usual rate.

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Check the award or agreement that covers them. Some awards and agreements say that you can direct employees to take unpaid leave during a shut down.

If the award or agreement doesn’t have any rules about this, you can’t direct an employee to take unpaid leave. You can ask them to agree to take unpaid leave during a shut down period.

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Under the Fair Work Act, you can stand an employee down without pay if:

  • there isn’t any work for them, and
  • you don’t have control over the reason there is no work for them.

You can stand an employee down without pay during a shut down if their award, enterprise agreement or employment contract allows you to.

A Christmas and New Year shut down is usually your decision and not beyond your control.

It is beyond your control if you aren’t allowed to trade on certain days because of State or Territory laws. This means that you can stand down employees without pay on these days.

You can’t stand down employees without pay on a public holiday - if they would usually work on that day then they’re entitled to the day off with pay.

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Page last updated: 22 Sep 2013