Yes — in most cases an Australian employer can direct you to take paid annual leave over a Christmas shutdown, but only if their instrument allows it and the direction is reasonable. Since 1 May 2023, the shutdown clauses in around 78 modern awards were standardised, and one thing they no longer allow is forcing you onto unpaid leave when your balance runs out.
That last point is where most December disputes now start. An employer plans a two-week close-down, a handful of staff have three days of accrued leave, and someone assumes the remaining seven days can simply be unpaid. Under the current award clauses, they can’t.
Key Takeaways
- Award-covered employers must give at least 28 days’ written notice of a temporary shutdown, and the direction to take annual leave must be reasonable (Fair Work Ombudsman).
- Since 1 May 2023, an employer covered by the standardised clause cannot require or direct unpaid leave for shutdown days you can’t cover with accrued leave.
- If you’re short, the gap has to be resolved by agreement — unpaid leave, leave in advance, working through, or being paid anyway.
- Award-free employees sit under s.94(5) of the Fair Work Act, where a Christmas–New Year shutdown is expressly given as an example of a reasonable direction.
What Changed in 2023?
Before May 2023, shutdown clauses varied wildly between awards. Some let employers direct unpaid leave outright, some were silent, and a few pre-dated the Fair Work Act entirely.
The Fair Work Commission replaced them with a standardised model clause across the affected awards. The Fair Work Ombudsman sets out the current position: the employer must give written notice of the shutdown period, the notice must be at least 28 days (unless the majority of affected employees agree to less), and the requirement to take paid annual leave must be reasonable.
The removal of the unilateral unpaid-leave power is the substantive change. An employer can still ask. They can no longer direct.
Can Your Employer Direct Forced Annual Leave Over a Christmas Shutdown?
Work through it in this order. Each step decides the next.
- Check what covers you. A modern award, an enterprise agreement, or nothing (award-free). The rules differ.
- Check the shutdown clause exists. Not every award has one. If yours doesn’t, and you’re not award-free, your employer has no shutdown-specific power to direct leave.
- Check the notice. Written, to all impacted employees, at least 28 days before the shutdown starts, specifying the period.
- Check reasonableness. A routine, well-signalled two-week close-down that the business runs every year is a much easier case than a surprise shutdown announced in mid-December.
- Check your balance. If it covers the shutdown, you take paid annual leave. If it doesn’t, move to the next section.
What If You Don’t Have Enough Accrued Annual Leave?
This is the question the 2023 clause actually answers, and the answer is a negotiation rather than a direction. Your employer has four legitimate routes for the uncovered days:
| Option | Requires your agreement? | Notes |
|---|---|---|
| Unpaid leave | Yes | Cannot be directed under the standardised award clause |
| Annual leave in advance | Yes, in writing | Creates a negative balance that can be deducted on termination under many awards |
| Work through the shutdown | No, if work is genuinely available | Employer’s call whether suitable work exists |
| Be paid as normal | No | The default when nothing else is agreed and no work is offered |
If you refuse unpaid leave and refuse leave in advance, and your employer can’t offer you work, paying you for the uncovered days is the outcome the clause leaves them with. That is not a loophole — it’s the deliberate design of the model clause.
A worked scenario
A 22-person design studio closes from 24 December to 7 January: nine working days once public holidays are stripped out. Notice goes out on 15 November, in writing — 39 days ahead, so the notice test is met.
- Maya has 84 hours accrued. Nine days at 7.6 hours is 68.4 hours. She’s covered; she takes paid annual leave and finishes January with 15.6 hours left.
- Tom started in September and has 22 hours accrued, worth about three days. He agrees in writing to take the remaining six days as leave in advance, so he starts the new year at roughly −23 hours and accrues back into the black by April.
- Ravi also has three days and declines both unpaid leave and leave in advance. The studio has no work for him. He takes three days of paid annual leave and is paid at his ordinary rate for the other six days.
Ravi’s outcome surprises employers every year. It’s the correct one.
Award-Free Employees: A Different Test
If no award or enterprise agreement covers you, the shutdown clause debate is irrelevant. Section 94(5) of the Fair Work Act 2009 applies instead: an employer may require an award/agreement-free employee to take paid annual leave only if the requirement is reasonable.
The Act’s own note gives two examples of reasonableness: the employee has accrued an excessive amount of annual leave, or the employer’s enterprise is being shut down for a period — and it names the gap between Christmas and New Year specifically. So a Christmas shutdown direction to an award-free employee is close to a textbook reasonable requirement.
There’s no 28-day rule here, and no statutory bar on agreeing to unpaid leave. But “reasonable” still does real work: three days’ notice of a fortnight’s close-down would struggle.
What About Public Holidays in the Shutdown Period?
Public holidays inside a shutdown are not annual leave. Christmas Day, Boxing Day and New Year’s Day are paid public holidays for full-time and part-time employees who would ordinarily have worked, and they should not be deducted from your leave balance.
This applies even where you’ve agreed to unpaid leave for the rest of the shutdown — the public holiday entitlement survives. Our Australian public holidays employer guide covers the state-by-state dates and substitute-day rules that decide which days fall inside a given close-down.
Frequently Asked Questions
Can my employer make me take leave with less than 28 days’ notice?
Only if the majority of impacted employees agree to a shorter notice period, or if you’re award-free (where the test is simply reasonableness). A single employee cannot be singled out for a reduced notice period.
Can I refuse to take annual leave over a shutdown?
If the direction is validly made — right instrument, right notice, reasonable — no. Refusing a lawful and reasonable direction is a performance matter. What you can refuse is unpaid leave for the days your balance doesn’t cover.
Does a shutdown direction count against excessive leave rules?
They’re separate mechanisms. Excessive-accrual directions apply when you’ve banked more than eight weeks (or ten for shiftworkers) under most awards, and have their own notice and consultation steps. See our guide to excessive annual leave in Australia for how that process runs.
Can my employer direct leave that pushes my balance negative without asking?
No. Leave in advance always requires a written agreement signed by both parties. A negative balance created without one is not enforceable against you on termination.
What This Means for You
If you’re the employer, three things keep you out of trouble: put the notice in writing at least 28 days out, run a balance report before you send it, and have the conversation with short-balance staff before December rather than during it. If you’re the employee, check your accrued balance the moment the notice lands — your options narrow the longer you wait.
Leave Balance shows every employee’s accrued balance in hours against a planned shutdown window, so you can see who is covered, who is short, and by how much, before the notice goes out. Flat AUD $29/month, unlimited employees, 14-day free trial. For the broader framework, see our guide to annual leave entitlements in Australia.
This article is general information, not legal advice. Check the modern award or enterprise agreement that applies to your workplace, or get advice from an employment lawyer.
leave emails? Track your employee's leave with Leave Balance
