The holiday season is a time for many of us to unwind, but if you’re a small business owner, the festive season can bring a level of stress. Many businesses in Australia go into hibernation over Christmas and New Year, with many employees planning to take leave because their workplace will shut.
Whether you’ll be open for business or not, how can you confidently navigate what you can and can’t legally do over the holiday season? We spoke to Sam Nottle, a lawyer with employment law firm McDonald Murholme, to find out.
Can I insist employees use their annual leave over the holidays?
Generally speaking, for award or enterprise agreement employees, these agreements will allow you to direct an employee to take annual leave during a shutdown period. “Best practice would be to check the award or enterprise agreement, as it might include a required notice period (e.g. four weeks) to be given to the employee,” Nottle says.
For award or enterprise agreement-free employees, employers may require an employee to take a period of paid annual leave in circumstances that are reasonable. “A requirement to take annual leave would be reasonable if the employer’s enterprise is being shut down for a period, say between Christmas and New Year,” Nottle says. “It would be best practice for an employer to provide notice to the employee of at least a month.”
What if an employee doesn't have enough accrued leave?
“If an employee does not have enough accrued annual leave, it may be the case that the modern award or enterprise agreement provides for a direction to take unpaid leave,” Nottle says. “I’d advise employers to refer to the relevant provisions.”
If the award or enterprise agreement doesn’t address this issue or if the person is an award or enterprise agreement-free employee and the contract of employment is silent on the issue, it’s unlikely that they can be forced to take unpaid leave for the period. “The employee would need to be paid their ordinary rate of pay during the shutdown period,” Nottle says.
Can I legally require employees to work on public holidays in the Christmas period?
“Employers are entitled to request an employee to work on a public holiday, but only if that request is reasonable – they cannot require it,” Nottle says.
An employee can refuse such a request if the request from the employer is not reasonable or the refusal from the employee is reasonable. Section 114 (4) of the Fair Work Act determines what is reasonable.
“The criteria are broad and in most circumstances it would be reasonable for an employee to refuse to work the public holiday,” Nottle says. “For example a refusal to work on a public holiday by a full-time employee is likely to be a reasonable refusal, taking into account all the individual circumstances.”
It’s worth noting that a full-time employee must still receive their usual salary for the public holiday even if they reasonably refuse to work that day. “Casual employees are not entitled to be paid if they reasonably refuse work for that day,” adds Nottle.
Are there different pay requirements for public holidays?
Employers must check the relevant modern award or enterprise agreement that covers the employee.
Generally speaking, employees covered by a modern award and/or enterprise agreement will receive penalty rates for those hours worked and/or some other non-monetary entitlement. But Nottle advises to check the employee’s award or enterprise agreement.
“For award or enterprise agreement-free employees, no additional entitlement is payable unless their contract of employment provides for such,” Nottle says.
What happens if a public holiday falls on a weekend?
Again, you’ll need to check the modern award and/or enterprise agreement relevant to your employee, but the general rule is that the greater of the penalty rates will be considered the rate of pay.
“For example, if Christmas Day was a Saturday, and the employee was entitled to 125% loading for public holidays, and 25% loading for Saturday, the employee would be entitled to loading of 125%,” Nottle says. “Some awards or enterprise agreements will provide that the employee is entitled to both loadings, so the employer must check the applicable award or enterprise agreement.”
Preparing your business for the holidays means being aware of your legal responsibilities to your employees. Knowing what this means for your business can help to ease the stress of the season.
For more information about staffing and shutting down over Christmas and the New Year, visit Fair Work