Christmas shutdown and staff entitlements:

If you own a business and want to shut down over Christmas and New Year, there is nothing stopping you from doing this. However, make sure you understand any obligations you have that will continue during this time.

If you decide to close down, you must still pay your full-time and part-time employees their usual wage unless your award or enterprise agreement says otherwise. (Casual employees don’t have to be paid during Christmas shutdown.)

If you would like your employees to take their annual leave (or part of it) over the Christmas shutdown period:


  • If your award or enterprise agreement says that you are able to direct when your employees take their annual leave, then you may do so over Christmas shutdown; however
  • Make sure you follow any specific rules about notifying staff that they must take leave and what should happen during shutdown. There may be a requirement that you provide a certain amount of notice, which you must comply with.


If your award or agreement doesn’t mention Christmas shutdown or directions to take leave, then you cannot force your employees to use their leave.

  • You can negotiate with them to take paid or unpaid leave but if they don’t agree, you cannot force them into it and must pay them accordingly.

If your employees aren’t covered by an award or enterprise agreement you can direct them to take leave if the direction is reasonable.

  • But make sure you follow any terms in the employee’s contract that deal with leave requirements for a shutdown.

What do I do if an employee doesn’t have enough annual leave to cover the Christmas shutdown period?

This again depends on your award or agreement:

  • If the agreement says that employees who do not have enough annual leave have to take unpaid leave, or annual leave in advance, to cover shutdown then you that will be the case;
  • Be aware though, that if the employee takes annual leave in advance, you would not be able to recover any excess annual leave in advance if the employee failed to return from the shutdown.

Can rostered days off (RDOs) and/or time off in lieu of overtime be used?


  • Some industrial instruments allow time off in lieu of overtime by employee election and employer permission to be taken at a later time agreed by the two of you – which means you are able to use overtime credit for Christmas shutdown;
  • This would usually be at the employee’s ordinary rate of pay (ie. an hour for each hour worked) but you should check your industrial instrument.


What happens for Christmas Day, Boxing Day and New Year’s Day pay?

These days are treated as public holidays – not annual leave days – which means that you must pay your employee their base rate of pay for these days, and the day shouldn’t be taken off their annual leave balance.

If you would like to examine what your legal obligations are regarding Christmas shutdown, and/or speak to a professional about your specific industry requirements or employment contracts, Sinclair + May would be happy to help.

This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation. 

Published Nov 29, 2018

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