As Christmas and the New Year approach, businesses often enter a period of shutdown, presenting unique challenges for business owners and bookkeepers. This period, marked by a mix of employees on leave, at work (skeleton crew), or without leave, requires careful management to ensure compliance with various awards and working conditions.
What is a Shutdown?
A ‘shutdown’ or ‘close down’, defined by the Fair Work Ombudsman, is a temporary business closure, typically during quiet periods or when many staff are on leave. It’s crucial to differentiate this from a ‘stand-down’ due to circumstances beyond the employer’s control, preventing employees from being usefully employed.
Understanding the Award
Business owners should familiarise themselves with the shutdown conditions outlined in their relevant awards or agreements, particularly during the Christmas break. This knowledge is vital for managing leave entitlements and other related aspects.
Key Points on Shutdown Payments:
- Updates in May 2023: Many awards were revised, especially regarding annual leave during shutdowns.
- Employer Requirements: Employers can require employees to take paid annual leave, giving at least 28 days written notice.
- Leave Negotiations: Options for employees without sufficient leave include using accrued time off, taking leave in advance, or unpaid leave.
- Public Holiday Considerations: Employees on leave during public holidays are treated as if they were working without affecting their leave accrual.
Consider Mary, who takes seven days of leave, including a public holiday. She will be paid for the public holiday, using six days of annual leave.
Working on Public Holidays:
Employees working on public holidays are entitled to base pay and possibly additional benefits as per their awards or agreements. Requests to work on these days must be reasonable, and employees can refuse based on reasonable grounds.
Not Working on Public Holidays:
Except for casuals, employees not working on a public holiday but who would normally have worked are paid their usual base rate.
Housekeeping Tips for Business Owners:
- Notify Employees: Inform all employees about the shutdown and the dates, providing at least four weeks’ notice.
- Gather Information: Collect necessary forms and confirmations regarding employees’ leave intentions.
- Work with Your Bookkeeper: Ensure your bookkeeper calculates the leave days accurately and is aware of public holidays during the shutdown.
- Manage Payroll: Determine the timing of payroll during the shutdown and communicate with your bookkeeper for any special arrangements.
Managing a year-end shutdown requires a collaborative effort between business owners and bookkeepers. Understanding the nuances of awards, agreements, and employee entitlements is key to a smooth transition into the holiday season and ensuring compliance with employment laws.
(Article sourced from the Institute of Certified Bookkeepers)