Before You Close for Christmas: The HR Checks Australian Employers Should Be Making Now

It’s only October, so talking about Christmas shutdowns might feel a little premature.

From an HR perspective, though, this is exactly when businesses should be thinking about them.

Every year, employers start planning their end-of-year closure, work out who is taking leave, organise the Christmas party and assume they’ll deal with the details closer to December.

The problem is that some of those details have deadlines attached to them. And if your business is covered by a Modern Award or enterprise agreement, “we always close over Christmas” doesn’t necessarily mean you can simply tell employees they’ll be using annual leave.

So, before everyone gets distracted by Christmas parties, Kris Kringles and trying to finish six weeks of work before 24 December, there are a few things I’d be checking.

Start with the Modern Award

This is probably my favourite place to start because the answer to “Can we make everyone take annual leave over Christmas?” is not simply yes or no.

First, work out what actually covers your employees.

Is it a Modern Award? An enterprise agreement? Are they award and agreement free?

If an Award or enterprise agreement applies, an employer can direct employees to take annual leave during a temporary shutdown only where the applicable instrument allows it. Fair Work also notes that shutdown provisions differ between Awards and agreements.

So, pull out the actual instrument and read the shutdown provision. Don’t rely on what another business does. Don’t assume the Award you used at your last workplace says the same thing. And definitely don’t assume that because you’ve done it this way for the last five years, it must be compliant.

Pay particular attention to the notice period

A lot of Modern Awards require at least 28 days’ written notice of a temporary shutdown, and in many cases a shorter period can be agreed with the majority of affected employees.

But this is exactly why I love actually reading Awards rather than stopping at a general Fair Work article. They are not all identical.

Under the Legal Services Award, for example, the current shutdown provision requires 28 days’ written notice. On the other hand, the Electrical, Electronic and Communications Contracting Award requires two months’ written notice and specifically deals with a shutdown of the employer’s entire operation in conjunction with the Christmas/New Year period. The Plumbing and Fire Sprinklers Award also requires two months’ written notice for its Christmas/New Year shutdown provision.

That difference matters.

If you’re planning to close over Christmas and haven’t checked the applicable provision yet, now is a very good time to do it.

What if someone doesn’t have enough annual leave?

This is another area where businesses can get caught out.

If the applicable Award allows a direction to take annual leave during a shutdown, that generally doesn’t mean you can automatically force an employee into a negative leave balance or unpaid leave because they haven’t accrued enough annual leave.

Fair Work says employees without enough annual leave may be able to agree with their employer to alternatives such as annual leave in advance, accrued time off or unpaid leave, depending on the applicable Award or agreement.

The word agree is key here.

And if the Award or agreement doesn’t contain a shutdown provision allowing the employer to direct annual leave in the first place, the employer cannot simply create that power through a workplace policy. Employees can still agree to take annual or unpaid leave, but that’s a different thing from being directed to do so.

For award and agreement free employees, the position is different again: an employer may require paid annual leave during a temporary shutdown where the requirement is reasonable.

This is why the first question should always be:

What actually covers this employee?

Then check the public holidays

Once you’ve worked out the shutdown dates, put them against the relevant public holidays.

If a public holiday falls during an employee’s paid annual leave on a day they would ordinarily work, that day generally isn’t deducted from their annual leave balance under the National Employment Standards.

They receive the public holiday entitlement instead. That sounds straightforward. Until your payroll system deducts annual leave for every weekday between the shutdown start and return date.

Fair Work specifically recommends checking payroll systems before a shutdown to make sure paid leave isn’t incorrectly deducted where a public holiday falls during the leave period.

It’s a small payroll check now that can save a lot of corrections and confused employees in January.

And if employees are working over the Christmas/New Year period, check the applicable Award or agreement for public holiday penalties, overtime and any other entitlements that might apply.

Christmas shutdown and stand down are not the same thing

Another small terminology point that can make a fairly significant legal difference.

A planned Christmas shutdown is not the same thing as a stand down under the Fair Work Act.

A shutdown is generally a temporary closure of the business, such as over Christmas and New Year.

A stand down involves employees not being usefully employed because of circumstances such as industrial action, equipment breakdown for which the employer isn’t responsible, or a stoppage of work for which the employer cannot reasonably be held responsible.

Closing the office because you’ve decided everyone is having two weeks off over Christmas doesn’t automatically turn it into an unpaid stand down.

Use the right provision for the situation you’re actually dealing with.

And then there’s the Christmas party...

Once the Award, leave and payroll pieces are sorted, we can get to the fun part 🍾

The Christmas party might happen at a restaurant, winery, bowling alley or pub rather than your normal workplace. That doesn’t mean workplace standards disappear.

WorkSafe Victoria specifically recognises work Christmas parties as work-related events where workplace sexual harassment can occur, and Fair Work notes that sexual harassment can occur outside the physical workplace and outside ordinary working hours where there is still a connection to work.

There is also now a positive duty under the Sex Discrimination Act requiring employers and businesses to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment and other relevant unlawful conduct connected with work.

Importantly, that is a preventative obligation. It’s not enough to wait until someone complains and then respond well.

The Australian Human Rights Commission's guidance specifically identifies reinforcing workplace policies and behavioural expectations before events such as Christmas parties, as well as managing the responsible service and use of alcohol, as examples of preventative measures.

So no, I’m not suggesting sending everyone a terrifying six-page email the morning of the Christmas party reminding them that HR is watching 😂

But I would be thinking about the risks before the event.

Dust off the policies now, not after something happens

Before the end-of-year celebrations start, I’d be reviewing things like your:

• Sexual Harassment / Respectful Workplace Policy

• Code of Conduct

• Drug and Alcohol Policy

• Social Media Policy

• complaints or grievance process.

Are they current? Do employees know they exist? Do managers understand their responsibilities? Are expectations around alcohol and behaviour clear? Does everyone know how to raise a concern? And, perhaps most importantly, does what happens in practice actually match what the policies say?

Having a beautiful policy sitting in SharePoint that nobody has looked at since 2022 isn't much of a preventative control.

The positive duty is about taking reasonable and proportionate measures to prevent unlawful conduct, rather than relying solely on a complaint process after something has already happened.

My practical end-of-year HR checklist

If I were reviewing a business now, these are the questions I’d be working through:

Shutdown

• What Award or agreement covers each group of employees?

• Does it allow the business to direct annual leave during a shutdown?

• When can the shutdown occur?

• How much written notice is required?

• Has that notice actually been provided?

• What happens for anyone who won’t have enough annual leave accrued?

Payroll and public holidays

• Which public holidays fall within the shutdown?

• Will payroll treat them correctly?

• Are any employees working those days?

• What penalties, overtime or other Award entitlements apply?

End-of-year celebrations

• Are our Code of Conduct, sexual harassment and drug and alcohol policies current?

• Have expectations been communicated before the event?

• How are we managing alcohol?

• Have managers been reminded that they're still managers at the Christmas party?

• Do employees know where to go if something happens?

• And have we considered what happens after the official event finishes?

That last question is worth thinking about too. The Australian Human Rights Commission notes that conduct connected with work can extend beyond the formal function itself, including to after-parties depending on the circumstances.

October is a lot easier than 18 December

None of this is particularly glamorous Christmas planning. But HR compliance is generally much easier when you look at it before there’s a problem.

Check the Award. Read the actual shutdown clause. Give the required notice. Work through employees who don't have enough leave. Check the public holidays and payroll. Review the policies. Set expectations before the Christmas party.

Then everyone can get on with enjoying the end of the year.

After all, 18 December is a little late to discover your Award required two months’ notice for the Christmas shutdown 😬🎄