The Fair Work Commission has released an update to all modern awards that impact the operation of leave and entitlements during a business shutdown period. This change has an impact on petrol and convenience wholesale and retail business operations from 1 May 2023.
Shutdown or Standdown?
A standdown is an unplanned situation, that is outside of the businesses control, that results in the employees either being unable to attend work or unable to be usefully employed at work – such as natural disasters or the breakdown of external machinery that the business has no control over that interrupts production or work.
There have been no changes to the standdown provisions.
A shutdown is a planned period of whole or temporary closure of the business.
“It is fairly common for many businesses, particularly those with an administrative focus, to undergo a shutdown at one or more periods in the year, most notably around the Christmas to New Year break”, explains ACAPMAs Elisha Radwanowski.
“When the business is going to have a shutdown period there has always been a requirement for them to communicate the details of the shutdown to the staff, and in most awards there were also additional requirements around access to leave and additional notice”, continued Elisha.
There have been changes to the shutdown provisions.
Shutdown requirements
Under the changes to the modern awards, when a business is implementing a shutdown they are required to;
- Provide the employees notice of the shutdown
- Provide the notice to the employees in writing
- Provide the notice to the employee no less than 28 days before the shutdown takes effect
Under the changes the business can;
- Direct an employee to take accrued annual leave during a notified shutdown as long as that direction is written, reasonable and the leave is paid as if the annual leave was taken.
- Enter a written agreement with an employee to take leave without pay during all or part of a shutdown.
- Enter a written agreement with an employee to take annual leave in advance during all or part of a shutdown.
Additional Considerations
An employee taking annual leave during a planned shutdown needs to receive payment as if they were on normal annual leave.
This is includes recognition and adjustment for any days in the period that would be public holidays and not annual leave days.
“Given that most businesses shutdowns are planned around holiday periods it is important to remember that if a public holiday falls on a day the employee would usually have worked then that day would be recorded as a public holiday and the employee would receive ordinary pay for their ordinary hours, instead of annual leave for that day”, explains Elisha.
For Example:
XYZ Fuel is shutting down for the 2023 Christmas/New Year period from 25/12/2023-2/1/2024 inclusive (9 days).
XYZ Fuel provides all employees with the written notice at least 28 days before the start of the shutdown and opens discussions with employees about how the shutdown will impact them and what their options and preferences are.
This shutdown is going to impact permanent admin employee Joan who works Monday to Friday and that there will be 7 of Joan’s working days that the business will be shutdown.
XYZ Fuel issues Joan a Direction to take annual leave during the shutdown period.
When calculating how much of Joan’s annual leave to deduct and how to calculate her payment, XYZ Fuel first needs to work out if there are any days in that shutdown period that Joan would usually work that are public holidays, because Joan is entitled to be home from work and still be paid base rate for her ordinary hours on a public holiday, and as such does not need to utilise her annual leave on any such days.
XYZ Fuel notes that Joan works Monday to Friday and during the shutdown period of Monday 25/12/2023-Tuesday 2/1/2024, there are 3 days (Monday 25/12/2023, Tuesday 26/12/2023 and Monday 1/1/2024) that are public holidays that fall on days that Joan would usually work. So XYZ Fuel note that Joan will receive base rate for ordinary hours on those three days.
XYZ Fuel notes that the remaining 4 of Joan’s working days of the shutdown period will be taken by Joan as annual leave and paid as if taken as annual leave.
“The business has to be careful that it is not unreasonably directing an employee to take annual leave, and it also has to be very careful that it is not deducting more annual leave from an employee that is appropriate – which is unfortunately easy to do in error if the implications of the public holidays are not correctly addressed”, cautions Elisha
Learnings for all businesses
“While most elements of the petrol and convenience industry, from wholesale to retail are characterised by continual trading, even through the traditional break periods, the shutdown provisions can apply to the whole business or just to a particular part of the business, so we often see shutdowns occurring of administrative departments, or depot operations as businesses go to skeleton or customer only facing staffing during those periods. So it is important to understand these changes and particularly the communication requirements”, concluded Elisha.
Here to Help
This article is general in nature and covers things to consider, implement and watch out for in your business. It is provided as general advice and you should seek further advice on your situation. ACAPMA Employment Professionals are available to assist ACAPMA members via employment@acapma.com.au. ACAPMA membership is affordable at only $810inc GST per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts. Visit: https://acapma.com.au/membership/ to learn more or to apply for ACAPMA membership.
Elisha Radwanowski BCom(HRM & IR)
Executive Manager for Employment and Training
ACAPMA
