Christmas is just around the corner which hopefully means that you are getting a much deserved break before 2013 sets in. But what about managing your employees’ leave over the Christmas period? This update sets out the 7 deadly sins of employers over the Christmas period when making decisions in relation to leave.

Sin 1 – Failing to give employees the required notice of an employer’s intention to shut down over the Christmas period

Employers should be aware that a number of modern awards and enterprise agreements contain strict notice and procedural requirements that employers must comply with if they wish to require an employee to take paid annual leave during a period of shut down. For example, employees covered by the Clerks – Private Sector Award 2010, Commercial Sales Award 2010, Hospitality Industry (General) Award 2010 and the Banking, Finance and Insurance Award 2010 must be given at least four weeks notice of an annual shut down.

If an employer fails to provide its employees with notice of its intention to shut down and the requirement that they take annual leave for the period, an employer may be penalised for failing to comply with procedural requirements and may be fined up to $33,000 per breach.

Employers should check the provisions of the specific modern award(s) or industrial instruments that apply as the notice periods differ.

If no modern award or enterprise agreement applies to an employee, the Fair Work Act 2009 (Cth) (Fair Work Act) allows an employer to require an employee to take a period of annual leave, but only if the requirement is reasonable. The Fair Work Act does not specify what is reasonable, however it does give an example that the employer shutting down its business between Christmas and New Year may be reasonable. The direction to take annual leave must be reasonable, having regard to the reasonableness of the period of notice given to take the leave, the needs of both the employee and the employer's business, the custom and practice in the business and any agreed arrangement with the employee.

Sin 2 – Not providing notice in writing of the shutdown period and requirement to take paid annual leave

Employers are advised to provide employees with written notice of the shutdown period and the requirement for employees to take paid annual leave in order to evidence compliance with the Fair Work Act. This can be done, for example, by way of a notice to employees with their payslip and/or an organisation wide email to employees. 

Sin 3 – Terminating an employee’s employment with notice inclusive of approved leave over the Christmas period

If an employer dismisses an employee from employment and the period of notice runs over the Christmas period where an employee has approved leave, employers should be mindful that the notice period cannot run concurrently with approved leave because to do so is to deprive the employee of their right to paid leave.

The recent decision of Wanders v Richards Mining Services Pty Ltd [2012] SAIRC 46, confirmed that an employer cannot avoid liability for approved leave that coincides with a notice period. In that case, the employer dismissed an employee giving him four weeks notice in December of last year. The notice period coincided with the employer’s forced shutdown period and the Christmas/New Year public holidays. The Court found that the employee had been deprived of his annual leave entitlement as it had been incorporated into the notice period. 

Sin 4 – Unreasonably requiring an employee to work on a public holiday

The Fair Work Act provides that an employer may request an employee to work on a public holiday if the request is reasonable (s 114(2)). The employee may refuse a request if it is unreasonable or their refusal to work is reasonable (s 114(3)). 

Section 114(4) sets out a number of factors that are to be taken into account in determining whether a request or refusal of a request is reasonable including:

  • The nature of the employer’s workplace or enterprise and the nature of the work performed by the employee.
  • The employee’s personal circumstances (including any family responsibilities).
  • Whether the employee could reasonably expect that the employer might request work on a public holiday.
  • Whether the employee is entitled to receive overtime, penalty rates or other forms of compensation for, or a level of remuneration that reflects an expectation of, work on the public holiday.
  • The type of employment of the employee (ie full-time, part-time, casual or shiftwork).
  • The amount of notice in advance of the public holiday given by the employer when making the request.
  • In relation to the refusal of a request, the amount of notice in advance of the public holiday given by the employee in refusing the request.

Sin 5 – Inappropriately disciplining an employee for refusing to work on a public holiday

If an employer takes disciplinary action against an employee for refusing to work on a public holiday, there is a risk that an employee may commence proceedings against the employer. If an employee is dismissed on the basis of that refusal, an employee may commence proceedings alleging that the refusal did not constitute a valid reason for dismissal. If some other form of disciplinary action is taken an employee may argue that adverse action has been taken against him or her on the basis that he or she has a workplace right to refuse to work on a public holiday or to refuse to work unreasonable overtime under the Fair Work Act or to make a complaint or inquiry in relation to their employment.

For example, in Brown & Premier Pet [2012] FMCA 1089, the Federal Magistrates Court found that the employer contravened the general protections provisions of the Fair Work Act when it dismissed an employee because he refused to work regular overtime on weekends and public holidays.

In that case, the employer introduced mandatory rostering arrangements that were to apply to all employees at its Brisbane fish room to include routine maintenance work on non-trading days including weekends and public holidays. The employee tried to negotiate time off in lieu if he worked weekends and this was refused by the employer. The employer subsequently terminated the employee’s employment.

The Court found that the employee had a workplace right not to work unreasonable overtime under the Fair Work Act’s National Employment Standards (NES) and that the employer had not satisfied the onus to show that it did not dismiss the employee for insisting on that right. The Court ordered that the employee be reinstated. 

Sin 6 – Underpaying employees for public holidays

The NES provide that employees (not including casuals) are entitled both to a day off work on a public holiday and to payment on their day off (s 114–116). “Public holidays” are defined in s 115 of the Fair Work Act to include Christmas Day, Boxing Day and New Years Day. Under the NES, employees are entitled to the day off; however, their employer may request them to work, so long as the request is reasonable (refer to Sin 4 above).

Under the Fair Work Act, an employee who is absent from work on a public holiday is entitled to be paid for his or her ordinary hours that would have been worked at their base rate of pay, excluding incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates or any other similar separately identifiable amounts. This payment entitlement under the Fair Work Act, does not apply to part-time employees whose hours do not include the day of the week on which the public holiday occurs, or casual employees who are not rostered on to work the public holiday.

An employee who works on a public holiday may be entitled to penalty rates or other compensation set out in an applicable award or enterprise agreement. Employers should ensure that they compensate their employees in accordance with the relevant modern award or enterprise agreement in place.

Sin 7 – Failing to pay leave loading on annual leave entitlements on termination of employment

Sometimes modern awards and enterprise agreements don’t specify that annual leave loading must be paid when an employee is paid in lieu of an accrued entitlement to annual leave on termination of employment. However, employers should be aware that the Fair Work Ombudsman’s position is that employees must always be paid their annual leave loading (if lawfully required) on termination even if not specified in the award or agreement. This view is taken because of the requirements of the NES which state that on termination employees must be paid what they would have been had they taken the leave.

Employers should be mindful that not all employees are entitled to be paid annual leave loading.