Many employers have a Christmas and New Year shutdown period or run on skeleton staff. A shutdown is when a business temporarily closes during slow periods of the year. It is not to be confused with a stand-down which is when employees are sent home if there is no useful work for them to do.
With JobKeeper coming into the mix for the first time this year, many businesses have asked us how employees should be paid. In this blog, we answer these questions.
Question: Can all businesses direct employees to take annual leave during shut down?
Answer: It depends. The Christmas and New Year period shutdown is permitted if their modern award or enterprise agreement allows it. You can double-check what your award says on FairWork’s Direction to take annual leave during a shutdown page.
If an award doesn’t allow an employer to direct employees to take annual leave, then an agreement must be made with each employee on whether they wish to take annual leave (paid or unpaid).
This means employers cannot force their employees to take their annual leave — even during a shutdown. Therefore, they must be allowed to work or be paid for the shutdown according to the JobKeeper enabling directions currently in place.
Question: So, if employees work during the shutdown, do employers have to pay their normal rate? What about public holidays?
Answer: If employees work during the Christmas shutdown, they must be paid as normal. If any of the days fall on a public holiday, then the employee must be given the day off without losing any pay or they should be paid public holiday rates according to their award or enterprise agreement.
If an employee is taking leave (paid or unpaid) during the shutdown, the JobKeeper enabling direction to reduce their hours doesn’t apply. This means that during the Christmas shut down; employees will be entitled to paid annual leave at their original contracted pay including any annual leave loading, or unpaid annual leave if they do not have enough leave accumulated to cover the shutdown.
Please note: It is important to ensure that all employees still receive the minimum JobKeeper payment — whether they are on leave or not. For example, if an employee takes unpaid annual leave, the employer must ensure that the employee is still paid the minimum amount of JobKeeper, in order to meet the JobKeeper eligibility requirements.
If an employee takes paid annual leave, but the annual leave payment is less than the JobKeeper payment, the employee must still be paid the minimum JobKeeper payment for the applicable period.
Employers who don’t pay the minimum guarantee will be in breach of the Fair Work Act 2009 (Cth) and will be at risk of penalties.
Question: What if the business no longer qualifies for JobKeeper after 3 January?
Answer: If an employer no longer meets the turnover test requirements for the December quarter, then employees must be paid their ordinary contracted hours prior to JobKeeper.
If the shutdown extends past 4 January, employers will need to communicate to employees that the business no longer qualifies for JobKeeper and the impact of that on their pay for the remainder of the shutdown period or their leave. This means employees on unpaid leave will no longer be entitled to receive the minimum JobKeeper payment.
Tis the season to be jolly, so if your questions around JobKeeper or the shutdown period is stealing your joy, please get in touch with us.