Shutdown clause changes that may impact your business

Changes have been announced that impact shutdown clauses under 78 Modern Awards! These changes took effect from 1 May 2023. It is important to note that this is different to “stand down” of employees.

What is a shutdown?

A shutdown occurs where the business makes the decision that it will stop operating for a temporary time period in order to allow employees to take annual leave. Employees cannot be required to take leave without pay during the period of a shutdown. Shut down provisions are generally provided for in Modern Awards and Enterprise Agreements.

What is the notice period for a shutdown?

The minimum notice period for the shutdown will depend on the particular award or agreement covering the business. When considering a business shutdown, it is important that you check any applicable rules for shutdowns under a relevant award or agreement to determine any applicable notice period and any other requirements. Awards or agreements usually contain minimum notice periods that must be complied with for a shutdown to be lawful.

Can I require my employee to take leave without pay during a shut down?

No. Under changes to the modern awards made in 2023, awards cannot include clauses which allow an employer to make an employee take leave without pay during a shutdown.

However, an employee may agree to taking leave without pay where the employee is out of annual leave. This agreement must be in writing. Other options when an employee is out of annual leave include agreement to annual leave in advance, or arranging for the employee to perform suitable work and paying them for ordinary hours.

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