Do staff have to take leave if you close your business for Christmas?

Preparing your business for the holidays means being aware of your legal responsibilities to your employees. Many businesses wind down over Christmas and New Year – and many employees plan to take leave because their workplace will shut.

Can you make employees use their annual leave over the holidays?

For award or agreement employees, these agreements let you tell an employee to take time off during a shutdown. Please check the agreement for a notice period, as the employee may need to provide it.

Employers can ask employees without an award or agreement to take paid annual leave if it's 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. Best practice for an employer is to provide notice to the employee of at least a month.

What if an employee doesn't have enough leave?

The modern award or enterprise agreement might allow for unpaid leave. Look at the relevant rules for more information.

The person may be an award or enterprise agreement-free employee, and their employment contract may contain nothing on the issue. In this scenario, it's unlikely that someone can force them to take unpaid leave for the period.

If this is the case, the employer would need to pay the employee their ordinary rate of pay during the shutdown period.

Can I make employees work on public holidays in the Christmas period?

Employers can ask employees to work on a public holiday, but they can't force them to do so unless it's reasonable.

An employee has the right to refuse a request if it is unfair or if they have a valid reason. Section 114 (4) of the Fair Work Act determines what’s reasonable.

Full-time employees receive their regular salary for a public holiday. This applies even if they decide not to work on that day.

However, the company does not have to pay casual employees if they reasonably refuse work for that day.

Are there different pay requirements for public holidays?

An employer must check the relevant modern award or enterprise agreement that covers the employee.

Generally, 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.

For award or enterprise agreement-free employees, no additional entitlement is payable unless their contract of employment provides for such.

What about if a public holiday falls on a weekend?

You’ll need to check the modern award and/or enterprise agreement relevant to your employee. 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 a 125% loading for public holidays, and 25% loading for Saturday, the employee would be entitled to loading of 125%.

However, take care, some awards or enterprise agreements will provide that the employee is entitled to both loadings.

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Date published 16 Nov 2023 | Last updated 16 Nov 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.