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Standardised Award shutdown provisions from 1 May 2023

27 April 2023

4 min read

#Workplace Relations & Safety

Published by:

Julia Wyatt

Standardised Award shutdown provisions from 1 May 2023

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.

Amended Awards

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:

  • Banking, Finance and Insurance Award 2020 (clause 22.5)
  • Building and Construction General On-site Award 2020 (clause 31.3)
  • Clerks – Private Sector Award 2020 (clause 32.5)
  • Commercial Sales Award 2020 (clause 20.6)
  • General Retail Industry Award 2020 (clause 28.4)
  • Hospitality Industry (General) Award 2020 (clause 30.4)
  • Manufacturing and Associated Industries and Occupations Award 2020 (clause 34.7)
  • Miscellaneous Award 2020 (clause 21.4)
  • Professional Employees Award 2020 (clause 18.4).

Impact of the model clause

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:

  • an employer can direct an employee to take paid annual leave during a shutdown period (where the employee has sufficient annual leave)
  • if the employee does not have enough annual leave, the employee and the employer can agree for the employee to take unpaid leave for the shutdown period (i.e. an agreement as opposed to a direction)
  • alternatively, and if permitted by the terms of the Award, an employee can take annual leave in advance during the shutdown period by making an agreement under the Award.

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.

Shutdown clauses in an employment contract

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.

Key takeaways

For employers of employees covered by the 78 amended Awards, the key takeaways to remember are that:

  • rather than directing employees to take unpaid annual leave during a shutdown period, employers will now need to obtain employee agreement in writing before implementing unpaid leave
  • alternatively, if permitted by the terms of their Award, affected employees may make an agreement with their employer to take paid annual leave in advance
  • employers can look to rely on the employment contract to obtain agreement from the employee on these matters
  • where an employee does not have sufficient annual leave for the shutdown period, and does not agree to take unpaid leave or leave in advance (either in the employment contract or separately), an employer can:
    • allow the employee to work (that is, if work can be performed); or
    • pay the employee for the time for which annual leave cannot be used.
  • at least 28 days’ notice of the shutdown period should be provided to employees.

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.

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.

Published by:

Julia Wyatt

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