With the end of the year approaching, many businesses are preparing for a temporary closure. For award-covered employees, this isn’t just an operational decision, it’s a compliance obligation.

If your team includes employees under any of the 78 modern awards that contain an updated annual shutdown clause, it’s essential to plan and document your shutdown properly.

Key obligations before your shutdown

Provide written notice at least 28 days before the shutdown (or less, if the majority of affected employees agree).

Issue a written direction to take paid annual leave — and ensure the direction is reasonable in the circumstances.

Handle insufficient leave correctly, you cannot direct an employee to take unpaid leave if they don’t have enough accrued annual leave.

Agree in writing if an employee will take annual leave in advance or unpaid leave for the remaining period.

Remember: any public holidays that fall during the shutdown still apply under the National Employment Standards (NES).

Compliance checklist

• Updated policy templates covering shutdown and annual leave directions
• Payroll and leave systems configured for leave in advance or partial leave agreements
• Written notice of shutdown issued to affected employees (Available on HR Command)
• Written direction to take annual leave (Available on HR Command)
• Written agreements for leave in advance or unpaid leave (Available on HR Command)
• Record of employee leave balances and approvals

Why this matters

The Fair Work Commission updated these clauses to clarify that employers cannot direct unpaid leave during a shutdown unless it is mutually agreed. The change aligns with the Fair Work Act 2009 and prevents exposure to claims for underpayment or unlawful direction.

Failure to comply can result in breach of award obligations, civil penalties, and disruption to payroll and leave records.

Practical next steps

• Identify employees covered by any of the 78 affected awards.
• Check leave balances early and communicate with employees about how the shutdown will affect them.
• Review your internal shutdown policy and template letters.
• Train HR and line managers on the correct process and the meaning of a reasonable direction.
• Store all documentation, notices, agreements, approvals, in your HR system or a dedicated HR Command folder for audit readiness.

Award Table: Annual Shutdown Clauses

Final reminder

When planning your shutdown period, treat it as a compliance checkpoint — not just a calendar event. Ensure your team issues notice in writing, uses reasonable directions, offers leave options where needed, and keeps full documentation. Getting it right protects both your workplace compliance and legal risk profile heading into 2026.