Christmas and employee risks

Don’t get your tinsel in a tangle

Christmas is just around the corner and it’s timely to review leave provisions to ensure employers are aware of employee entitlements as well as employer obligations during this time.

Christmas Shut Down

Most modern awards and agreements allow for an employer to make a direction to an employee to take annual leave during a Christmas shut down, as long as certain requirements are met. This generally includes the requirement to give each employee notice in writing of the shutdown and the requirement to take leave, with notice required between 4 weeks – 3 months in advance depending on the award.

If an employee doesn’t have enough annual leave to cover a shutdown period, the employer can either:

Paid Annual Leave in Advance

In granting leave in advance, it is important for the employer to ensure their business is not financially disadvantaged if the employee’s employment subsequently ends without having sufficient accruals of leave.

The employer must exercise caution when granting leave in advance. Where the employment of an employee ends whilst the employee still has a negative leave balance, it can be difficult to recover amounts owing to the Company. In some instances, an award may refer to taking leave in advance and the employer’s right to recover moneys. However, such a provision does not appear in all modern awards.

Therefore, it is important for employers to confirm with Employsure whether the applicable award has a provision for the recovery of advance leave, and ensure that any agreements to provide leave in advance are recorded in writing with a claw back clause.

Deduction of Paid Annual Leave in Advance on Termination

Care should be taken if deducting monies from an employee’s wages, especially without express provision of permission under the applicable industrial instrument, relevant legislation or contract of employment.

The Fair Work Act (2009) states an employer may deduct from monies owing if:

Refusal of Leave Application

There is no obligation for an employer to approve an employee’s annual leave request. The request may be refused if it is not made in accordance with policy requirements and on reasonable business grounds. However, there are situations where fairness and flexibility may be called for when an annual leave request is received. For example, a leave request exceeding the maximum amount of leave able to be taken at one time, but is for the purpose of overseas travel to celebrate a religious festival requires delicacy in handling. Refusing the request outright because it contravenes policy may be seen as indirect or direct discrimination; therefore, discretion should be used to deal with this rare occasion, fairly.

Casual Employees

Under the National Employment Standards (NES) casual employees are entitled to a loading applied to the base rate of pay, intended as compensation in lieu of leave entitlements, such as annual leave. There is, therefore, no entitlement to payment for a casual employee during a shutdown period.

Part Time Employees

A full time employee is entitled to 20 days of annual leave for each 12 months of service. A part time employee is entitled to a pro-rata amount of annual leave based on the amount of hours worked. For example, a part time employee working 2.5 days per week will be entitled to 10 days of annual leave.

Shift Workers

Under the NES, shift workers are entitled to an extra week of annual leave per annum, totaling five (5) weeks. To determine whether an employee is a shift worker and therefore entitled to this additional week, the relevant modern award should be consulted.

Christmas is a notoriously busy time of the year, however remaining aware of leave provisions and setting expectations early will ease the hassle for employers.

By Lea Fox, Employsure Documentations Consultant