Navigating Annual Leave & Public Holidays – What Employers & Employees Need to Know
Every year, as we approach the Christmas break, I like to remind employers and employees about their rights and responsibilities in terms of taking leave and how this relates to public holidays. This blog will address this issue and help you all plan your payroll for the upcoming festive season.
All businesses are different and have varying requirements during the festive season. Some shut down completely, while others remain open, even on public holidays.
Shutdowns
If your business shuts down at Christmas, you can give your employees the direction to take annual leave for the shutdown period. Your direction must be reasonable, in writing, and provided to all affected employees. If your employees are covered by an award or enterprise agreement, you do need to check the rules relating to shutdown and directing employees to take leave, because all awards and
agreements are different. If no award or agreement applies, employers can only direct the employee to take annual leave if the direction is reasonable.
Employees without enough accrued annual leave
Sometimes, employees may not have accrued enough annual leave to cover the full period of a shutdown. In this case, employers can agree to allow an application for annual leave accrued in advance or for unpaid leave. Whatever is decided, it is important to check the rules in the award if one applies, and to put all decisions made in writing.
Working during the festive season
If your business remains open during all or some of the festive season, the rules for taking and paying leave are fairly simple. Workers need to receive their normal pay while they work and be paid for any public holidays that they take off. If they work on a public holiday, workers need to be paid public holiday rates which are listed in all awards.
Employers may request that workers do overtime during the festive season, including on public holidays. However, this request must be reasonable, taking into consideration the needs of the business and the employees’ personal commitments. Again, this is driven by the relevant award and/or the employees’ contract, if they are award-free. Remember, if employees work on a public holiday and do overtime on that day, they may be eligible for penalty rates, another day off or extra annual leave – check your award to clarify the details.
Not working on a public holiday
If an employee doesn’t work on a public holiday, they must be paid their base rate for the ordinary hours they would have worked. Public holidays are not deducted from the employee’s accrued leave balance, so ensure that all leave applications do not include any public holidays before approving them. These rules also apply during a shutdown. It’s important to note that employees should be given the choice to work on a public holiday, should they wish to do so.
Resources
Here are some links that may assist you when you are planning your festive season payroll:
Festive Season Public Holidays in Australia 2025-26
Annual Leave Fact Sheet
Rules & Leave Entitlements – Fair Work
Key Takeaways
- Employers can direct employees to take annual leave during shutdowns, but the direction must be reasonable and in writing.
- If employees lack sufficient accrued annual leave for a shutdown, employers can grant unpaid leave or annual leave in advance with proper documentation.
- Employees working during the festive season must receive normal pay, and those working on public holidays need to be compensated at public holiday rates.
- Employees not working on a public holiday should receive their base hourly rate for hours missed, not affecting their accrued leave.
- Consult relevant awards and agreements for specific leave entitlements and payroll guidelines during the festive season.
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