Changes to annual leave shut down provisions
Annual leave shut down provisions will be standardised after a decision from the Full Bench of the Fair Work Commission (FWC). The change is part of the FWC’s ongoing four-year review of awards.
This new model term will affect the:
- Electrical, Electronic and Communications Contracting Award 2020
- Clerks — Private Sector Award 2020
- Manufacturing and Associated Industries and Occupations Award 2020
The model clause will take effect from 1 May 2023.
Of significance for employers is the removal of the overarching right of the employer to direct an employee to take leave without pay if they do not have enough annual leave accrued to cover the shutdown period.
The process by which a workers may be required to take leave without pay has become more complicated as a result. The bench noted that the removal of existing provisions will have the legal effect or practical effect that an employee in this situation will have to be paid.
However, this will depend upon the applicability of the Fair Work Act standdown provisions (s524), the terms of the employee’s contract of employment, as well as any applicable enterprise agreement.
In relation to s 524, there are likely to be many circumstances in which s 524(1)(c) applies; for example, in the building industry, if a head contractor closes a building site over Christmas/New Year, that is likely to cause a stoppage of work for which a subcontractor employer cannot reasonably be held responsible and thus enable a stand-down under s 524.
Further, the practical effect, of this change widens the scope that an employer may refuse annual leave applications throughout the year in order to ensure the worker has an appropriate balance for the shutdown period.
Any shortfall of leave may still be managed using a variety of other means; including use of accrued rostered days off and time off in lieu of overtime, or granting requests to take annual leave in advance.
It will be unusual for an employee to have no accrued annual leave, so in most cases, it will only be a question of covering a shortfall, and not the entire period. Though employers will now have to consider ‘projecting forward’ to ensure that workers that there are leave balances available.
Some existing enterprise agreements may give an employer that right, however, it is doubtful many new agreements will have such a provision as they will be assessment against an award with a more generous provision.
MEA recommends that:
- when considering requests for annual leave during a year, an employer will have to ensure the employee will have enough leave for a shutdown period, leave may be granted on the condition the employee agrees that they will take unpaid leave during the;
- the employer could require employees to take accrued RDOs or TOIL during the shutdown (if they operate such a system). A TOIL system may be implemented individually or collectively if the business foresees that there will be a shortfall; and/or
- when an employee does not have enough leave to cover the shutdown, the employer will either have to find work for the employee to perform, or pay the employee for the period not covered by accrued annual leave.
Should you have any questions regarding these changes please contact the Employer Advice Line on 1300 889 198. Master Electricians have unlimited access to the Employer Advice team.