Ready for the end-of-year shutdown? Leaves, obligations, holiday pay & more

It’s that time of year again. The calendar is filling up, the inbox is overflowing, and you’re probably dreaming about switching off for a few weeks. The end-of-year shutdown isn’t just about locking the doors and heading to the beach.

Let’s unpack everything you need to know to shut down smoothly, keep your team happy, and stay on the right side of the Fair Work Ombudsman.

What actually is an annual shutdown?

An annual shutdown is a temporary closure of all or part of a business, where employees are generally directed to take their accrued annual leave. You might call it a “close down” or simply the “holiday break”.

It usually happens when customer demand dips, like during the Christmas and New Year period, making it the perfect time for everyone to recharge. But while it sounds simple, you can’t just hang a “See you in January” sign and stop paying people.

Employers must navigate a complex web of workplace laws, including the National Employment Standards (NES) and specific modern awards, to ensure everything is above board. Getting this right means peace of mind for you and a stress-free holiday for your staff.

Can I force my employees to take leave?

The short answer is: it depends on your award or agreement.

For years, many employers relied on broad terms that let them direct staff to take leave or even take unpaid leave if they didn’t have enough accrued.

But the rules changed on 1 May 2023. Learn more about it here.

The Fair Work Commission introduced a new model clause into most modern awards (around 78 of them) to protect employees.

Here is what the new rules generally require if you want to direct employees to take leave:

• Written Notice: You must give at least 28 days’ written notice of the temporary shutdown.
• Reasonableness: The direction to take leave must be reasonable.
• Accrued Leave: The employee must have enough paid annual leave accrued to cover the period.

If your award doesn’t have a specific rule about shutdowns, you can’t force an employee to take leave unless they agree to it.

Always check your specific award, as some, like the Meat Industry Award 2020, require up to 3 months’ notice.

What if an employee doesn’t have enough leave?

This is where things get tricky and where the 2023 changes really bite.

In the past, you might have just told a new starter, “Sorry, you’ll have to take unpaid leave for the two weeks we are closed. You can’t do that anymore.

Under the new rules, you cannot direct an employee to take leave without pay just because you are shutting down.

So, what are your options if someone’s leave balance is looking a bit thin?

• Mutual Agreement: You can agree with the employee that they will take unpaid leave, but it has to be their choice.
• Paid Leave in Advance: You could agree to let them go into negative leave (taking leave in advance), provided your award allows it.
• Pay Them Anyway: If you can’t reach an agreement, you may have to pay them their ordinary hours for the shutdown period, even if the business is closed and they aren’t working.
• Find Them Work: You might need to let them work during the shutdown if they refuse unpaid leave and you don’t want to pay them for nothing.

This puts the pressure on you to manage leave balances proactively throughout the year so you don’t end up with a huge liability in December.

How do public holidays work during a shutdown?

One of the most common questions I see in payroll groups is: “Do I deduct annual leave for Christmas Day?”

The answer is a hard no.

If a public holiday falls during a period of annual leave, that day is treated as a public holiday, not annual leave.

The employee should be paid their base rate for the public holiday, and no hours should be deducted from their leave balance for that specific day.

It’s a small detail, but getting it wrong is a quick way to annoy your staff and breach compliance rules.

Make sure your payroll software (like Payroller!) is set up to recognise these dates automatically so you don’t have to manually adjust every single payslip.

How should you communicate the shutdown?

Clear communication is your best friend here.

You don’t want your team finding out about the shutdown dates through office gossip or a last-minute sticky note on the fridge.

Since you are legally required to give 28 days’ notice under many awards, you should be drafting your communication well before November ends.

Here is a simple checklist for your employee communications:

• Check the Dates: Confirm exactly when you are closing and reopening.
• Put it in Writing: Send an email or a formal letter to all staff.
• Be Specific: Clearly state that they are directed to take annual leave (if applicable) and how much leave will be deducted.
• Open the Floor: Invite them to come to you if they have concerns about their leave balance.

Don’t forget your customers, either.

Use your email signature, social media, and website to let everyone know when you’ll be unavailable.

Managing expectations now stops the angry “Why aren’t you answering my emails?” messages on Boxing Day.

What should be on your end-of-year checklist?

Shutting down isn’t just about payroll; it’s a full operational reset.

I like to use this time to tidy up the loose ends so I can walk back in January with a clear head.

Here is what you should be ticking off:

• Audit Finances: Look at your cash flow and make sure you can cover the holiday pay, rent, and any bills that land while you’re sipping cocktails.
• Secure the Premises: Check your alarms, lock the windows, and maybe unplug the non-essential electronics to save power.
• Back Up Data: Ensure all your files are saved and secure.
• Plan for January: Set your goals and priorities for the first week back, at least until the end of the financial year.

Taking a holistic view of your business now shapes your expectations for the new year.

Why does planning early matter?

You might be thinking, “I’ll worry about this in December.”

But leaving it too late limits your options.

If you miss the 28-day notice window, you lose the legal right to direct staff to take leave under the model clause.

That means if an employee refuses to take leave, you could be stuck paying their full wages while your business is producing zero revenue.

Planning ahead also gives you time to have those awkward conversations with staff who don’t have enough leave accrued.

It allows you to negotiate solutions like leave in advance or unpaid leave without the pressure of a ticking clock.

Plus, it’s just better for morale.

Your team wants to book their holidays and make plans with their families.

Giving them certainty early on shows you respect their time and their life outside of work.

How can Payroller help you survive the season?

Let’s be honest—managing leave calculations, public holidays, and compliance rules on a spreadsheet is a nightmare waiting to happen.

You have better things to do than count days on a calendar and manually adjust leave balances. Payroller software like Payroller handles the heavy lifting for you.

You can easily track employee leave balances in real-time, so you know exactly who has enough accrued for the break.

Our system automatically handles public holidays, ensuring your staff get paid correctly without you needing a calculator.

And when it comes to Single Touch Payroll (STP), we keep you compliant with the ATO every step of the way.

So, instead of stressing over payroll this Christmas, you can actually enjoy the shutdown you’ve worked so hard for.