27 April 2023
4 min read
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If you’re an employer with employees covered by one of 78 Awards, you have until 1 May 2023 to review your arrangements for directing employees to take unpaid leave during any business shutdown periods, including the Christmas/New Year break. This follows from a raft of changes made by the Fair Work Commission (FWC) last year.
On 22 December 2022, the full bench of the FWC decided to standardise shutdown provisions in a majority of Awards (Decision). In doing so, the FWC issued a model clause to replace the existing shutdown clauses in the 78 Awards subject to the Decision (extracted in paragraph [82] of the Decision).
On 3 March 2023, the FWC published over 70 individual determinations which separately outlined the exact clauses to be inserted into each Award. These new clauses will commence on 1 May 2023.
The Decision will amend 78 Awards. The full list is attached to a previous decision of the FWC as Attachment A. Some of the key Awards on this list include:
The main impact of these changes is that employers will no longer be able to direct employees to take unpaid leave during a shutdown period if they do not have sufficient annual leave accrued to account for the full period. Instead, the new requirements mean that:
The model clause also introduces a standardised 28 days’ written notice to employees of a temporary shutdown period. These changes will commence on 1 May 2023.
If an employee’s employment contract includes a clause that provides for unpaid annual leave in the event of a shutdown period, it is arguable that the employee agreed, in writing and upon commencing employment, that they would take unpaid leave in such circumstances.
Although the FWC does not directly address this unsettled issue in the Decision, the FWC does provide that (at paragraph [69] of the Decision):
“As to the legal effect [of the new model clause], this will depend upon the applicability of s 524 [of the Fair Work Act], the terms of the employee’s contract of employment, as well as any applicable enterprise agreement”.
While this approach remains untested, employers may still be able to rely on the employment contract to obtain the required agreement from the employee concerning unpaid leave. Regardless, as best practice, employers should confirm this agreement for any particular shutdowns with their impacted employees.
For employers of employees covered by the 78 amended Awards, the key takeaways to remember are that:
The above changes will impact how employers manage their employee’s annual leave during business shutdowns, so reviewing any existing arrangements and contracts is important to ensure compliance with the new provisions before 1 May 2023.
If you have any questions regarding the the FWC’s recent changes or would like to understand your obligations as an employer, please get in touch with a member of our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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