Businesses generally slow down around Christmas and New Year, and so temporarily close. Since only Christmas Day, Boxing Day and New Year’s Day are public holidays, employees may be instructed to take annual leave for the remaining days during the shut down period.

Simply, employers can require employees to take annual leave over Christmas if the relevant award allows it. If your industry’s award is silent on compulsory annual leave over the holiday period, employers can still require employees to take annual leave if the business typically shuts down over Christmas. 

What if Your Employee Doesn’t Have Enough Annual Leave for the Shut Down Period?

If your employee has accrued annual leave that does not cover the shut down period, you can arrange for them to take their leave in advance, or unpaid. 

However, if your employee does not agree to annual leave in advance or to unpaid leave, you will have to pay their normal rate for the shut down period. You cannot force them to take unpaid leave.

Make sure you check the relevant award as some awards clearly state that if an employee doesn’t have enough annual leave, then they must take unpaid leave. The arrangement you make with your employee for the shut down period needs to comply with the award or with the registered agreement in place.

Giving Notice

If your industry’s award allows you to instruct them to take annual leave, make sure you comply with the notice requirements. Many awards require you to give your employee at least four weeks notice of the shut down period.

Steps to Take in Preparation for the Shut down Period

1. Check the Requirements Under the Employee’s Award, Registered Agreement or Employment Contract

Ensure that you take steps to understand your obligations relating to the shut down period, as well as any notice requirements.

2. Communicate

Inform your employees of the shut down period, including:

  • Length of the shut down period;
  • Reason for the shut down;
  • Receipt of paid annual leave (unless you have made other arrangements with your employee); and
  • Annual leave comes out of their accrued annual leave entitlements.

3. Prepare and Give a Letter of Notice of Requirement to Take Annual Leave

Employers should provide their employees with notice as required by the relevant award or agreement, including the dates for the shut down period.


If you are preparing for a Christmas shut down period, the primary considerations are the employee’s award and agreement. You must ensure that you comply with the provisions relating to annual leave and shut down periods. 

It is important for employers to know what they can ask their employees, and be confident that they are meeting their obligations under employment law. If you are unsure, have a chat with an employment lawyer who can help you understand what your obligations to your employees are. 

Questions? Please get in touch with us on 1300 544 755. 

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