leave during compulsory closures

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Four options for managing employees without leave during compulsory closures

Sourced from HR Daily 08 December 2014

Figuring out how to handle employees who haven’t accrued enough leave is one of the biggest challenges facing employers with compulsory Christmas business closures, warns a lawyer. Employee protests against enforced leave can cause a lot of angst at this time of year but, from a practical perspective, this is not the main problem organisations with compulsory shutdowns face, DLA Piper partner Brett Feltham told HR Daily.

“The issue that arises in practice ‚ ¨ and probably causes the greatest problem for employers ‚ ¨ is where they want to do a shutdown for all or part of their business, and an employee does not have sufficient annual leave,” he said. “The Fair Work Act is silent on that issue. There’s no specific provision that deals with what happens in those circumstances.” Feltham advises employers to instead look to employees’ employment contracts, enterprise agreements or awards to see whether they address enforced leave or shutdown periods. “If those documents are silent, then ‚ ¨ strictly speaking ‚ ¨ there’s no ability under the Fair Work Act to require an employee to take unpaid leave,” he warns. Feltham says organisations facing such a situation must try to negotiate with employees and present them with their four options:

  • Take annual leave in advance, against what they will accrue upon their return;
  • Take unpaid leave;
  • Work on as part of a skeleton staff; or
  • Negotiate some form of discretionary paid leave.

He warns, however, that the fourth option could leave employers open to accusations of favouritism. “The issue with that is, in one sense those employees are being treated beneficially against every other employee that has sufficient annual leave and is required to use that leave,” he says. “The employee doesn’t have sufficient annual leave but the employer will nonetheless allow them not to attend work, because effectively they’ve closed the door during the Christmas period… [and] will pay them.”

Early planning and notification key to successful shutdowns

Employees who have accrued leave but don’t want to take it can also cause problems during compulsory Christmas closures, says Feltham. “For employers to get it right it’s all about pre-planning and ‚ ¨ to the extent possible ‚ ¨ notifying employees well in advance, because if employees are put on notice that the shutdown’s coming, in effect, they can make their own personal arrangements. “Problems arise when employers don’t notify employees with sufficient time and employees feel like they’re being forced to take an entitlement, which… they may well have been saving for a rainy day or ultimately holding on to, to be paid out on termination,” he says. “It’s about early planning and early notification, and I think if you do that, as an employer, many of the practical issues [associated with compulsory shutdowns] go away.” Employers should also have timely conversations with those employees without sufficient leave entitlements so workers have time to assess their options, says Feltham. “Where only part of a business is to be shut down, rather than the whole business, the employers need to think about [whether they] can… properly define which part of the business is to be shut down and which part is to remain open,” he says. “If there are particular employees where [the shutdown] creates a significant issue for them, then it may well be that those employees can be moved around to that part of the business that stays open.” For employers who have a period of enforced leave each year, it’s a good idea to have policies that clarify this so employees aren’t taken by surprise, says Feltham. He warns that employers who are contemplating a Christmas shutdown but haven’t informed their employees by now may have left their run too late. “For modern award or enterprise agreement employees, often those awards and agreements will require certain periods of notice… so employers need to be aware of whether there are any notification period requirements and ultimately meet those, otherwise they risk being in breach of their award or agreement obligations.”

What rights do employers have?

An organisation’s right to enforce a period of closure over Christmas depends on the workers they’re dealing with, says Feltham. “For employees covered by modern awards and enterprise agreements, those awards and agreements… can require an employee to take [enforced] annual leave but only if it is reasonable, and often an award or an agreement will also have other conditions that need to be met,” he says. The Clerks Private Sector Award, for example, requires organisations to give four weeks’ notice of a shutdown. “For someone who’s award or agreement-free then basically an employer can require that employee to take annual leave, but only once again if it’s reasonable, and in a note to the Fair Work Act it actually suggests that a Christmas period shutdown will be reasonable,” he says. What is ‘reasonable’ will also depend on factors such as the employees’ needs, business requirements, previously agreed arrangements, and past practices at this time of year. “All of those matters will go into [determining] whether or not it’s reasonable, but… as a practical matter, if employees have been given a sufficient amount of notice ‚ ¨ let’s say four weeks ‚ ¨ that the business is intending on shutting down and, particularly in circumstances where this has happened in the past, it’s probably going to be reasonable in all circumstances.”