As the festive season approaches, many Australian small businesses are gearing up for a well-deserved break.
However, amidst the excitement of the holidays, it’s crucial for business owners to be well-informed about the payroll implications associated with shutting down over Christmas and New Year.
The Fair Work Commission’s recent updates to shutdown provisions have added a layer of complexity to be aware of.
The largest change is employers cannot force employees to take unpaid leave even if the business is closed.
Depending on the workers’ awards, they have a few options and employers have notice requirements to adhere to. These changes impact 78 modern awards, so the first step is to ensure you know what award your employees fall under.
1. Understanding Shutdown Provisions: Check the Applicable Modern Awards
There may be multiple awards relevant to your business and industry. An employer must know the specific rules and entitlements associated with your industry.
The Fair Work Commission’s website provides a helpful search tool for employers to determine the relevant award.
2. Annual Leave Considerations: Plan Ahead for Employee Entitlements
The updated provisions emphasise that employers cannot mandate unpaid leave during a shutdown. Instead, employees may be required to take annual leave, provided the employer gives at least 28 days’ written notice.
Lift Accounting & Advisory are closing from Friday, 22nd December, and therefore had to notify our staff in writing (or email) by Friday, 24th November. Did you?
For employees with insufficient annual leave, alternative arrangements can be negotiated. They can use accrued time off, take the annual leave they will receive in the new year, or agree to leave without pay.
However, these decisions rest with the employee, highlighting the importance of clear communication and agreement.
Individual agreements may vary, so it’s essential to provide these details in accordance with the notice requirements of the relevant award.
3. Addressing Public Holidays and Timely Payroll Processing
Public holidays, such as Christmas Day and New Year’s Day, require special attention in terms of payroll. Ensuring timely payments is crucial whether salaries are typically paid before or after the holidays.
If your payday falls during the shutdown period, assess whether you need someone to process accounts and work the day or if you can schedule the release.
If you choose to pay employees earlier than usual, ensure you have communicated the changes to them, as employees likely have budgeted for seasonal expenses.
If your business is closing for the holidays, promptly sorting out payroll is essential to avoid late payments. Allocate payments for public holidays during the festive season, as failure to do so could negatively impact your payroll system.
Planning ahead for shutdown periods and considering alternative arrangements, such as processing payroll a day earlier, can help maintain payroll accuracy and employee satisfaction.
Extra care is needed for employees working during the holiday period, as they may be entitled to extra pay or an additional day off, particularly on public holidays.
Plan Ahead For A More Relaxing Christmas Break
Navigating the payroll implications of closing over the Christmas holidays requires careful planning, clear communication, and compliance with updated Fair Work Commission provisions.
Australian small business owners can ensure a smooth and compliant transition into the festive season by understanding the specific requirements of your industry’s modern awards and proactively addressing annual leave, public holidays, and payroll processing.
Being aware and planning ahead provides you with the confidence that you have done all the right things. Don’t leave any issues as a future-you-problem.
Tick off payroll from your pre-Christmas checklist and return to your business in the new year refreshed and ready to face new growth.
If you have any questions or want to know more, please email us at office@liftaccounting.au or call us at (02) 4344 2460.
Merry Christmas to you and yours!
